Major split over $15 first-checked-baggage-fee among US airlines

Last week Delta Airlines clearly stated that they do not have plans to charge the $15 first-checked-bag-fee that has been instituted by legacy carriers American Airlines, United and US Airways.

This creates an unusual split between the major legacy carriers in the US, with three of the majors adding $15 to passenger fees when checking any baggage and the other three eschewing the $15-first-bag practice. Effectively, American Airlines, United Airlines and US Airways are charging about 30 percent of their passengers more than Continental, Delta and Northwest.

Something will have to give as the word spreads with leisure travelers and others not protected against these charges. All, incidentally, charge a $25 per-second-checked-bag fee.

The full repercussions of the $15 first-checked-bag-fee have not yet been realized because the airlines that implemented the fees have created a phased introduction based on when travelers purchased their tickets. The impact on the airport and baggage check-in infrastructure and the boarding processes will come into better focus this month as the exemptions for tickets purchased prior to June 15 wane.

Some low cost carriers such as Spirit and Allegiant have similar first-checked-baggage-fees. However, they do not pretend to be full-service airlines and these fees are part of an overall savings on airfares. With the legacy carrier split, the $15 first-checked-baggage-fee can become a significant differentiator between the flights of Delta/Northwest/Continental and American/United/US Airways. Plus, major low cost carriers, JetBlue and Southwest have not jumped on the $15 first-checked-bag bandwagon.

Though the first-checked-bag fees sound like big moneymakers, reality is that collecting these fees and creating software to deal with these fees will end up costing almost as much as the airlines will collect in the short run. This is not an immediate moneymaker.

Here is list of American’s projects, underway or planned, to allow it to collect this new $15 baggage fee according to Mark DuPont, American’s vice president of airport services planning:

• new training of employees
• additional employees to be assigned after the fee takes effect to deal with anticipated problems
• new software to handle collection of the baggage fees by agents
• new software to allow collection of the baggage fee by self-service kiosks
• new programs to handle an expected increase in carry-on bags
• new procedures to deal with luggage when the overhead bins are full
• new overhead bins to accommodate more carry-on luggage on future planes

I have already spoken with passengers who are booking away from the American/United/US Airways block because of the additional charges. This $15 fee is in almost all cases doubled to $30 if, as most leisure travelers normally do, the flights are for round trips.

My predictions (slightly modified) from an earlier post:

• This luggage fee is a step too far. AA/US/US will eventually have to back off of the fee.
• Problems with controlling carry-on luggage will increase exponentially.
• Delays at TSA checkpoints will increase as more passengers bring more baggage through the inspection points.
• Delays at the boarding gates dealing with luggage arguments will further delay AA/UA/US flights to less than a 50 percent on-time rating.
• Other airlines (CO/DL/NW and the LCCs) will adopt a wait-and-see approach to this dramatic fee increase, forcing AA/UA/US to rethink their fee structure.
• The Transportation Department will force airlines to disclose these fees in their advertisements. This will allow other airlines to simply raise airfares without raising the total advertised cost of the trip.

The fat lady at the airport check-in counters and jetways has not begun her song, yet.