Friday, December 10, 2010

Airlines, Fees, and Profits

Everyone knows that the airlines have added a lot of fees over the last few years.  From aisle seating to checked baggage, onboard food to priority boarding, many things that used to be free now cost money.

What many people probably haven't realized is the extent to which airlines depend on these fees.

U.S. Airways President Scott Kirby says that his airline expects to earn nearly $500 million in profit this year, but that "a la carte revenues represent 100% of that profitability."  In other words, absent the series of add-on fees that U.S. Airways has imposed, it would only break even.

What does that mean for travelers?  It depends. 

If you're the sort of person who wants rock-bottom fares and expects nothing of an airline that you wouldn't get on a bus--and not one of those next-generation buses we've talked about; I mean an old-fashioned Greyhound bus--you're going to be very pleased.

On the other hand, if you expect to get a seat of your choice, travel with luggage and want to have a snack onboard the aircraft, understand that the fare you see may not be the final price you'll pay.

The good news?  Each airline is following its own strategy.  Southwest, for instance, does not charge for checked baggage because it has significantly lower labor costs, while Spirit even charges for carry-on bags. 

That means that, however you like to travel, someone probably has you covered.

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