March 2, 2021

On The Road: Airlines Recovering From 9/11 With Extra Fees

Airlines in the United States lost $55 billion and shed 160,000 jobs during that decade. But the industry has worked through the economic tumult. A decade later, the system is smaller in terms of capacity, but it’s still in good working order. Last year, for example, 720.4 million people boarded airplanes in the United States, slightly higher even than the 719.1 million passengers in 2000.

Two weeks ago, at the annual convention of the Global Business Travel Association in Denver, Michael W. McCormick, the executive director of the group, hinted at a recovery.

“We’re not seeing record profits, but we’re also not seeing the end of airline travel as we know it,” he said. “So have things changed for the better?”

Good question. Planes are more crowded than ever, but fares remain near historically low levels. Other than the airport security challenges, however, the one major difference from 10 years ago is all the extra fees airlines have added to base fares, charging for things that used to be part of the ticket price.

Last year, for example, domestic airlines raised $3.4 billion just from charges for checked bags. In 2007, the year before most airlines started charging extra for checking a bag, the comparable figure was $464.2 million.

“Some would argue that you make more money from ancillary fees than you do operating the airplane, and that you’d like to figure out a way to sell us pillows and things while keeping the plane on the ground,” Peter Greenberg, the CBS News travel editor, joked to airline executives during a panel discussion at the business travel convention.

“It’s the right way to price the product,” replied Doug Parker, the chief executive of US Airways. Like other airline executives, Mr. Parker is adamant that ancillary fees have become a permanent part of the fare structure — and that they actually make a lot more sense than, say, the fees that many hotels charge customers.

“Last night, I stayed at a hotel down the street and I wanted to get a bottle of water and it cost $6,” Mr. Parker said as someone on the stage passed him a free bottle of water. Airlines, he noted, do not charge anyone for a drink of water.

Not that the idea hasn’t come up.

In 2008, he said, US Airways “actually instituted charging for all drinks on board, including sodas and water,” he said. The idea was dropped a few months later because of passenger resistance.

“Six bucks in my hotel room last night for water!” Mr. Parker repeated as the audience laughed. “We just wanted to charge a dollar!”

While airplanes that have been flying mostly full for over two years as capacity has been reduced to cut costs, another inconvenience has arisen. To avoid paying to check a bag, more passengers have been lugging more belongings onto already crowded planes. Some industry analysts have estimated that as many as 59 million extra bags are now being carried onto planes each year.

“It’s much harder to find space for your bag now on the airplane,” Mr. Parker said. He said the trend hasn’t created actual departure delays, “but the boarding process takes longer. We’re starting the boarding process sooner.”

Among the changes he predicted that all passengers can expect to see is a limit on extra checked bags, by airlines and also by the Transportation Security Administration at its checkpoints. “It’s becoming a huge problem for them. When you stand in line at the T.S.A., you see that the line is because of all those bags going through, not because of the people themselves being processed,” Mr. Parker said.

Also ahead is even further contraction in the domestic commercial aviation system. Delta Air Lines, for example, recently announced that it would drop service to 24 small and midsize airports, and US Airways said last week it was reducing service in Las Vegas by an additional 40 percent. At the same time, airlines have been mothballing many 50-seat regional jets, long the backbone of service at midsize airports.

Over the last decade, Mr. Parker said, the domestic airline business came to terms with the reality that it “had gotten way overbuilt, with too many hubs and too many airplanes.”

“We’re being much more rational, not trying to chase market share wherever we can but instead doing what we do well and sticking to that,” he said.

Asked about complaints from travel managers that airlines don’t provide enough “transparency” in showing optional fees clearly along with base fares, Mr. Parker said that business travelers were well aware of the panoply of extra charges, especially those for checked bags. Alone among the major carriers, Southwest Airlines does not charge for checking a bag.

“To suggest that people don’t know about baggage fees is hard to embrace,” he joked. “Because if you haven’t heard about them, Southwest will run an ad every couple of minutes to make sure you do.”


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