Airlines Rake in Big Bucks in Extra Fees | NBC Southern California

Airlines Rake in Big Bucks in Extra Fees

In 2010 U.S. airlines collected $5.7 billion in fees, $3.4 billion in baggage fees alone

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    Baggage Fees Rake in Big Bucks for Airlines

    All those extra annoying fees that airlines charge these days for what used to be free, may actually be the thing keeping those planes in the air.

    The numbers are in, and U.S. airlines collected $3.4 billion in bag fees last year, that's a 24% increase from 2009.

    Airlines Rake in Big Bucks in Extra Fees

    [LA] Airlines Rake in Big Bucks in Extra Fees
    Thanks to baggage, and other extra fees, U.S. airlines earned an extra $5.7 billion last year, in addition to ticket sales. (Published Monday, June 13, 2011)

    Typically it costs $50 round-trip for the first piece of checked luggage.

    Such fees are one of the few bright spots for an industry that is caught between rising fuel costs and customers who expect rock-bottom airfares.

    "If it weren't for the fees, the airlines would most likely be losing money," said Jim Corridore, airline analyst with Standard & Poor's.

    That's little comfort to fliers who've felt nickel-and-dimed by the airlines over the past three years as the number of fees have increased.

    "Once they got that formula down, and they started seeing that these ancillary services were really going to make them a lot of money, it's created a monster," according to Tama Taylor Holve, CEO of Willett Travel.

    Delta generated $952 million, the most money generated by bag fees. They were followed by the combined United and Continental at nearly $655 million, American at $580 million and US Airways $513 million.

    Airlines aggressively raised ticket prices early in 2010, but those increases couldn't keep up with the price of jet fuel.

    "Unfortunately, for the airlines when they try to roll $50 into the ticket prices, people stop buying tickets," said Rick Seaney CEO of FareCompare.com.

    So instead, the airlines focus on fees, which have expanded beyond charging for bags.

    Now passengers can pay for the option to board early, get more leg room and to earn extra frequent flier miles. There are also fees for oversized bags, changing tickets, making a reservation over the phone and - on some airlines - reserving a seat in advance.

    Fees for changing reservations or placing them via phone alone generated $2.3 billion for the airlines in 2010, down 3% from the year before.

    "You get charged for baggage handling, and that's kind of baloney, especially when you don't know that it's going to get there on time. You may arrive, but your luggage isn't always going to arrive," says Amber Chaib, an airline passenger.

    Critics say so many different fees also makes comparison shopping difficult.

    But starting August 23rd, new rules from the Department of Transportation will require airlines to "prominently disclose all potential fees" on their website prior to a ticket purchase.

    Until then, fliers just need to do their research before heading to the airport.