Baggage Woes

Courtesy Ryanair

Ryanair

Ryanair flew into a rough patch with Italian antitrust lobbyists following its decision to levy new fees for hand luggage. Unless you pay €6 (US$7) for priority boarding, you will be allowed to carry only one piece of hand luggage, which must be able to fit the space under the seat in front. Any second piece (up to 10 kg) to be checked in will be at a cost of €8.

Antitrust advocates said this could amount to unfair commercial practice as hand luggage should be “an essential element of transport”. It would distort fares and make it difficult for comparison across the industry.

In defence Ryanair said its policy was intended to “improve punctuality and reduce boarding gate delays”. In fact, it maintained that it would not make any money out of it and may in fact lose revenue when more passengers switched to carrying smaller bags instead of the the normally larger suitcases which must be checked in at a higher fee.

However, research by US travel consultancy IdeaWorks suggests that a third of the airline’s profits came from so-called “ancillary revenue” comprising £1.7 billion (US$2.2 billion) from charges for add-ons such as checked baggage and seat selection last year.

Swoop

Across the pond in Canada, new Calgary-based budget carrier by WestJet is also facing complaints about fees charged for a carry-on bag. The fee is C$35 (US$27) if paid in advance, C$50 if paid at the time of check-in at the airport, and C$80 at the gate.

Passenger rights advocate Gabor Lukacs has filed a complaint with the Canadian Transportation Agency, claiming that this is unlawful since the Canada Transportation Act requires domestic airlines to offer a basic fare for travel within the country that has no restrictions with “reasonable baggage”.

As in the Italian argument, Lukacs finds Swoop’s practice “deceptive”. While what constitutes “reasonable” may be debatable, the general rule thus far has been that the allowable one piece has to fit in the overhead compartment or under the seat. Ryanair has restricted the carriage at no fee to the space under the seat, but Swoop is not even considering that. In defence, Swoop says it is “confident that Canadians are appreciative of the ability to be in control of what they pay for.”

American carriers

Meantime south of the border, American carriers are taking turns to up their checked baggage fees. American Airlines joined JetBlue, United Airlines and Delta Air Lines in raising their fees from US$25 to US$30 for the first bag, and from US$35 to US$40 for the second bag. Budget carriers Spirit and Frontier are already charging between US$40 and US$50 per bag. For now, Alaska Airlines has kept its fees at US$25 for the first and second bags, while Southwest Airlines still allows passengers to check in two bags for free.

These fees generally apply to travel within North America and to destinations in the Caribbean. Internationally, the likes of United Airlines cannot afford to ignore the competition especially in Asia where many legacy airlines such as Singapore Airlines and Cathay Pacific are still generous with free carriage of two checked bags.

Indeed, ancillary services have become a significant billion dollar business world-wide in an airline’s portfolio as more operators including legacy airlines go “a la carte” to keep the fare seemingly low but charge extra for features that used to be part and parcel of the normal ticket price. And the list is getting longer to include also priority check-in, priority seats (with more leg room), meals and headsets. It will not stop growing as the permutation multiplies, as can be seen in the different ways charges are applied even within the same service category, such as the baggage fees imposed by Ryanair.

Advertisements

Alaska Airlines considers fee for choice seats

THE next time that you book an air ticket, be aware that the fare may not come in the usual package when you last travelled. And I’m not talking about just budget carriers, known for their add-on model that charges a base rate and customers pay additionally for options such as meals. Full-service airlines (the appellation is becoming a misnomer) have adopted this same principle to beef up revenue.

Some legacy carriers are already charging for meals and in-flight entertainment. More airlines have followed the United Airlines example of levying a fee for checked baggage. Singapore Airlines levies a fee for preferred seating with more legroom. And now Alaska Airlines is considering going down that same road, considering a fee for “choice seats”.

Ancillary revenue has become a significant source of boosting profitability for these airlines – as if it is really a new income stream for providing new and additional services to their customers. According to Alaska Airlines CFO Brandon Pedersen, this amounts to about US$300 million annually for the airline, 40 per cent of which is derived from checked baggage. He felt Alaska Airlines was somewhat a laggard in the game. Mr Pedersen said: “We recognize we haven’t done as much as other carriers… We think there is more to do here.”

Alaska Airlines is even considering upping its checked baggage fee from US$20 to US$25 for the first bag – to be in line with the industry norm – and why when it looks like many passengers will travel with at least one checked bag? At the current rate, this is already contributing US$120 million annually.

Lest it be too hasty, Mr Pedersen warned that Alaska Ailrines’ major rival Southwest Airlines does not charge passengers for checked baggage. So how far can Alaska Air go before its customers decide to switch allegiance?

What next, you may ask, and wish for the good old days when the airfare was less complicated and entailed certain basic services without your having to stuff down an early meal before boarding or agonize over what you should throw out of your only bag that is allowed as a carry-on?

Indeed, competition is the air traveller’s last bastion of hope for a fair fare deal. And it behooves upon the authorities to ensure that that stays alive and is not abused through collusions and fare-fixing. Airlines should know that what has happened in recent times is that travellers have become more conscious of the numbers. And that more of them are shopping around than they used to, especially when the product becomes increasingly uniform and the only reason for travelling is to get from one point to another.