Airline Costs Keep Going Up

LCT Magazine
Posted on June 16, 2008

United Matches American Airlines In Charging for First Checked Bag

UAL Corp.'s United Airlines will charge passengers on domestic flights $15 each way for the first checked bag, becoming the second carrier to attempt to defray soaring fuel costs by charging for services formerly provided as a courtesy.

The move by United and AMR Corp.'s American - the nation's two biggest carriers - likely means smaller airlines will follow their lead.

The fee won't apply to customers who are flying in first or business classes or who have premier status with United or Star Alliance.

In addition to the first-checked-bag fee, overweight bags, third bags or items that require special handling will increase from $100 to $125 or from $200 to $250, depending on the item.

The changes apply to customers who purchase a domestic ticket on or after June 13. For travel to and from Canada, Puerto Rico and the U.S. Virgin Islands, the fee will be charged on tickets bought on or after Aug. 18.

"With record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for," Chief Operating Officer John Tague said.

United estimates that the new $15 service fee will apply to one out of three customers. The potential revenue from baggage-handling fees, including those for checking a first and second bag, will be approximately $275 million a year. The fee to check a second bag is $25 each way and also applies to only some customers.

United was the first to enact the fee in February, and rivals soon followed suit as fuel costs continued to soar. They have forced airlines to charge for a range of services -- such as checking in bags -- that were previously considered part of the ticket price, as well as identifying new ways to extract revenue from passengers. It has also prompted carriers, including United, to slash projected capacity for late this year and ground gas-guzzling older planes.

Source: Wall Street Journal


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