Thursday, September 2, 2010

Fees and Rewards: Airline Priorities

Over the last two years, we've seen U.S. domestic airline amenities cut back and fees put in place for things that used to be free.

Many airlines have eliminated pillows and blankets, ostensibly in the name of hygiene. One can genuinely agree with the merits of this idea, yet that justification has nicely underpinned offers for passengers to buy their very own new pillows and blankets; do we really imagine that it was primarily health and not revenue that led to the move?

Then there's luggage. Free checked baggage used to be a given, but most airlines now charge even for a first checked bag, and only Southwest still allows two free pieces of checked luggage per passenger. Spirit has gone the opposite direction and added charges for carry-on bags in addition to those for checked luggage, telling passengers in effect that their ticket prices are genuine only for those who have no intention to stay more than a few hours and are pointedly not traveling on business.

And, of course, food and beverages. The industry balked at U.S. Airways' 2008 attempt to charge for all drinks (something that low-cost carriers in other countries do). But complimentary meals, which had been waning since the traffic declines after September 11, 2001, finally vanished this year when Continental pulled the plug.

There's an interesting countertrend emerging, though: while airlines are charging for things that never cost money before and charging more for things that used to cost less (like curbside luggage and alcoholic beverages), they are also taking more opportunities to extend those benefits for free or at discounted rates to passengers who qualify.

Again, take luggage. The legacy carriers charge $25 or more for a first checked bag and up to $50 for a second. But if you hold elite status with the airline you're traveling -- or if you're an elite member of a partner airline -- you won't pay that fee.

Similarly, Continental recently boosted the cost of onboard alcoholic beverages from $5 to $6. But if you're paying with a Continental credit card, you'll actually pay $4 -- less than you paid before the price went up.

In the months ahead, keep a lookout for more of these special discounts and benefits.  They may move people around in the skies, but airlines are in business to make money.  For a while, they forgot that.  Now, they're remembering, and airlines are bound to expand the list of what is given at no cost to their most profitable customers.

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