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Fees, Fees and more Airline Fees

By January 29, 2010 No Comments

In the beginning we may have been caught off guard by ancillary fees charged by some of the major airlines, Delta, United, Continental, American Airlines and others, but what is happening now? Are we learning to accept them, ignore them or just plain hate them?

According to a study by ProMedia Travel, many corporations are reporting that anywhere from 5% – 15% of their corporate travel budgets have been consumed by airline ancillary fees. What appears to have happened is that many airlines have ‘unbundled’ their fees, but have not lowered airfare. Consumers are okay with paying fees for items or services that add value to their travel experience, however, they are not okay with paying fees for what use to be included in the cost of their airline ticket such as baggage fees. Checking baggage is an essential part of travel and most people feel should be included in the price of the ticket, the quoted price by the airline, which it isn’t.

Several carriers, such as JetBlue and Southwest, are charging additional fees, but these fees are for services that add value while fares remain reasonable and a checked bag is included. This has allowed these airlines to generate revenue while at the same time keeping their customers happy. JetBlue does this by charging additional for seats with extra leg room and their TruBlue program has no blackout dates, you can use points to book any seat on the plane, points don’t expire and change and cancellation fees are reasonable. Though the boarding process with Southwest can be challenging at times, their philosophy is similar, they don’t charge change or cancellation fees and neither airline charges for the first checked bag, and they use this as a very effective advertising tool.  These airlines are actually turning million dollar profits while the major carriers are reporting multi million dollar losses.  When will the major airlines realize that there is something to be learned from JetBlue and Southwest Airlines?

We don’t necessarily need to become a prisoner to ancillary fees. Travel managers can try using the increased cost of doing business with the airlines as a tool during contract negotiations. The Department of Transportation could make a ruling mandating that airlines display what every passenger considers to be part of a reasonable airline ticket, and then allowing us to ‘opt out’ of items like a first check bag.

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