Tuesday, November 29, 2011

One other point about the lunacy of checked baggage fees

Portfolio.com wrote a rather insightful article in 2009 about the truth in charging airline baggage fees>>>

Here's an indisputable fact: During the second quarter of the year, the nation's largest airlines collected $669.5 million worth of baggage fees from the nation's hapless passengers. That's an attention-grabbing 275 percent increase from the second quarter of 2008.
But here's an indisputable truth: The more baggage fees that the big airlines pile on their customers, the faster their overall revenue is collapsing. In fact, the only carriers that escaped a double-digit revenue decline in the second quarter were the two that still allow all passengers to check at least one bag for free.

That you heard about the indisputable fact last week from airline executives, self-important industry analysts, and the myopic general media but weren't told about the indisputable truth is an indication of exactly how badly business travelers are served these days. Not only are the big airlines flying blindly toward a fiscal precipice, their supposed watchdogs are blithely going along for the ride.

"Baggage fees are the kind of shortsighted things that are killing us," the top U.S. executive of a European airline told me recently. "The accountants we have are great at tracking the 'ancillary' revenue we generate whenever we invent something like a baggage charge. But they have absolutely no way to match that against our potential overall revenue exposure if travelers book away from us. 
And no one holds them accountable for their one-way accounting. It's a scandal."

"Scandal" may be a little strong, but there's no arguing this airline executive's basic point. Ever since airlines began hiving off traditional services like in-flight meals, seat assignments, and checked baggage from the basic airfare, the carriers have carefully tracked the growth of this secondary revenue. But they never correlate it against their overall revenue picture. And U.S. legacy carriers have studiously ignored the fact that Southwest and JetBlue, which generally avoid what is now called as a la carte pricing, have gained market share, won the most customer kudos, and, not coincidentally, been the most consistently profitable.

.Consider the odd, but entirely trackable, evolution of baggage fees. For decades, most carriers on domestic routes permitted customers to check at least two bags free. That changed during the first quarter of 2008, when United Airlines introduced a $25 fee for most coach passengers checking a second bag. The other legacy carriers—American, Continental, US Airways, and the now-merged Delta and Northwest—quickly matched. By 2008’s second quarter, American Airlines announced a $15 fee for checking the first bag. That fee was quickly matched too, not only by the legacy lines, but also by smaller carriers such as Alaska Airlines and AirTran Airways. The only holdouts: Southwest Airlines, which has clung tenaciously to its two-free-bags policy, and JetBlue Airways, which still permits all passengers one gratis checked bag.

By the time the airlines had released their 2009 first-quarter results, a pattern was obvious: The carriers that had most quickly embraced checked-bag fees had suffered a massive decline in revenue, anywhere from 9 to 21 percent compared with the first quarter of 2008. As I reported contemporaneously on my own website, the airlines that didn't ding customers for bag fees had much more modest declines. The pattern was there for anyone to see

Read more: http://www.portfolio.com/views/columns/seat-2B/2009/09/29/baggage-fees-hurting-airlines-bottom-line/#ixzz1f9eggcvq

The Airline That Originated The Baggage Fee Files Bankruptcy

We have been blogging for awhile about the lunacy of airline baggage fee.  By now you have read about the bankruptcy filing of American Airlines.   American Airlines was the first major airline to impose a fee on the first bag checked. 

We now turn to the way back machine to discover why the airlines turned to this most anti passenger nickle and dime business model.   

The LA Times reported in May 2008>>>>>

Starting June 15 most American passengers must pay $15 for checking a single bag. That comes on top of the airline's decision two weeks ago to charge $25 for a second bag.
American, the largest carrier at Los Angeles International Airport, said it was compelled to take the actions in what it called an "extraordinary" environment.

Other airlines are expected to take additional steps to fight the twin curses of rising oil prices and a weak economy, increasing prospects for higher fares and crowded planes as the busy summer travel season kicks into gear with the upcoming Memorial Day weekend.

Already, domestic airfares for summer travel are up 20% compared with a year ago, according to Farecast.com, an online travel search service. American said rising oil prices had increased its expected annual fuel costs by nearly $3 billion since the start of the year.

"There is no sugar-coating the fact we are facing an extraordinarily difficult economic environment," Gerard Arpey, the just fired on November 29, 2011 chief executive of American's parent, AMR Corp., said during a conference call with reporters Wednesday. "The industry cannot continue in the current state."

The fee is the first imposed by a major airline for checking in the first bag, a service that has previously been included in the price of the ticket. The fee does not apply to "elite" level frequent-flier club members, those paying full fare and some others.

The airline began charging $25 for a second checked bag earlier this month, and has imposed even higher charges for additional luggage. The airline said it also would raise fees for services including reservation help and the handling of oversized bags.

The moves to generate new revenue came on the heels of another record-breaking day in the petroleum market and raised the prospect of another round of airline bankruptcies if oil prices continued to rise unabated.

The Elliot.org website reveals the paniful truth about airlines and their baggage fees. 

For the last few years, the airline industry has made a variety of dishonest claims related to fees. First, it said it was adding a surcharge for the first checked bag to cover higher fuel costs, but when fuel prices dropped, it kept the fee. It also said that by unbundling prices, it wanted to give customers more “options” and lower fares. Problem is, they never actually lowered fares when they added fees for services that used to be included in the ticket price. They just started charging more for something that used to be included in the ticket price.

That upsets some passengers.

“It leaves such a bad taste in my mouth,” says Diane Olivier, who recently paid more than $60 to get seat assignments on a British Airways flight. “One assumes when you are paying over $1,600 for a ticket and you book early it comes with a seat of your choice.”

The second problem is the way in which these extras are revealed. Airlines routinely broadside their customers with fees, either informing them of the extras immediately after their ticket purchase or when they arrive at the airport.

When Mayer Nudell recently tried to check his bag curbside in Long Beach, Calif., for example, he was told there’d be a fee for the privilege. Had his airline, JetBlue, bothered to tell him about the surcharge? No. “I discovered it at the airport,” he says.

Of course, Nudell could have said “no” and checked his luggage at the ticket counter. But others aren’t so fortunate. They find they must either pay hundreds of dollars for their bags or abandon their personal belongings at the airport. And they feel the airline has them over a barrel.

Thursday, September 22, 2011

Ansar Shrine 2012 Las Vegas Blog

Click the above link to read our latest blog "Ansar Shrine 2012 Las Vegas Trip."  We are putting together the final details of the trip and will post them first at this blog.  More details, as well as sign up information will be available at our web site www.planetravelonline.com next week.  Thanks for traveling with us.

Tuesday, July 26, 2011

Where is my refund?

From CNN online:

Airlines benefiting from a unplanned federal tax holiday should save the money for the government or pass it along to the passengers, but should not pocket the money themselves, key congressional leaders said Tuesday.

Two Democratic lawmakers said the airlines' actions belied the industry's frequent lament that government taxes and fees hurt air travel.

"As we have heard from airlines for many years, these fees, all of which are passed on to the consumer, depress the demand for air travel, hurting the industry's bottom line. We are left to conclude that your previous assertions were incorrect about the impact of taxes and fees on the industry," Sens. John D. Rockefeller IV, D-West Virginia; and Maria Cantwell, D-Washington, wrote in a letter to Delta Air Lines CEO Richard Anderson, chairman of the board of the Air Transport Association, an industry group.
Rockefeller and Cantwell urged the airlines to "put all of the profits that they are making" from the tax lapse into an escrow account so they can transfer it to the Airport and Airway Trust Fund (AATF) when Congress reinstates the taxes.

"If the industry is unwilling to protect the integrity of the AATF, at a minimum, it should pass the savings onto the consumers," the senators said.

Read more by clicking on the above link.

Thursday, July 21, 2011

We have added another web site to the family

Although it was born just this week, it already has a promising future.  Focusing on the many ways families looking to travel can spend more money being there rather than getting there we are tackling what can be a very large target.  With the help of fellow colleagues here at Planet Travel we are building this new site slowly and surely.  We plan to include some very valuable content.  Watch this space as it grows.

Saturday, July 16, 2011

"I actually think we annoy people who don't fly us more than we annoy people who fly us."

An interview with a fee happy airline CEO from the consumerist web site:

Low cost, no-frills Spirit Airlines takes heat from people annoyed with how it charges a fee for everything and for its crass and tasteless ads that capitalize on scandals and tragedies in the news. We've dished some out ourselves. But it's hard not to walk away from reading this AP interview with its CEO and business model mastermind Ben Baldanza without some new respect for the guy. For one, he turned around a money-losing airline and it's been profitable ever since. And at least this airline is upfront about how they're gonna give it to you.

Read more by clicking the above link.

Friday, July 08, 2011

Window or aisle?

From the travel section of nytimes.com:

In general, there are no hard and fast rules for scoring a good seat. Because each airline has its own seating configurations and policies, a strategy that may work on one airline may not make a difference on another. Last year, for example, JetBlue began making most exit-row seats on its A320 aircraft available to passengers just after purchase. Other airlines tend to hold onto those seats for their top-tier frequent fliers or release them just before boarding. That said, there are a few basic guidelines that travelers should consider when trying to get the seat of their choice.

Read more to see how to get that coveted extra leg room seat by clicking the above link.

Sunday, July 03, 2011

We have been on vacation

Good to be back.  We have not posted an entry, obviously for several months.  Distracted with day to day operations of the business I guess.  However, we are back.  And promise to continue the latest insider information we stumble accross on a regular basis. 

Thursday, January 06, 2011

New York Times Shares Tricks For Cutting Travel Costs

From the New York Times online:

2. BUY ON TUESDAY Most airlines begin sales on Monday evenings, and by the following day other airlines have usually matched the lowered fares on the same routes, said Anne McDermott, editor at Farecompare.com, which tracks price trends. Last month, for example, Virgin America had a sale on Dec. 13, with one-way fares as low as $79 on some routes, according to Farecompare. The next day, there were sales from AirTran, Southwest and American, with one-way fares from $59. Because sales are hard to predict, travelers looking for the best deal should start their searches three to four months in advance, when airlines begin to look closely at which routes may need a sale to fill seats. 

Read more by clicking the above link.