Air Canada announced that it will do away with the C$25 second checked bag fee introduced back in the spring. It also plans to roll its fuel surcharges into airfares. These moves are all in the wake of “moderated” fuel costs, and far different from the actions of US legacy carriers.
The most recent announcement by Air Canada stands in stark contrast to United Airlines’ decision to increase its second checked bag fee to $50. This gives me hope that the legacy carriers who have led the charge towards additional baggage fees will take a step back.
The move by Air Canada is probably because its main competitor, WestJet, has never charged for the first or second piece of checked luggage — just like Southwest in the US. In this case, since WestJet is a strong competitor on virtually every route, Air Canada decided to make the changes in order to remain competitive.
In the US, the situation is much muddier. Most airlines have different variations of checked-baggage charges ranging from the high of $15 for the first checked bag plus $50 for the second checked bag, to some that charge only $25 for the second checked bag, to others that only charge for the second checked bag, to Southwest that charges no additional fees.
The money rolling into the airline coffers is major. The Wall Street Journal Middle Seat blog noted that United is projecting $300 million in revenue from these baggage fees. The money is even more important considering that United managed to lose more than $500 million in botched fuel hedging purchases.
Continental Airlines claims its income will increase $100 million because of a new first checked baggage fee. American Airline is now expecting to post a profit in 2009 with the dropping fuel costs and their baggage revenue stream.
Soon, the differences between the legacy carriers and Southwest Airlines will begin to register with the rank and file travelers. Southwest’s load factors will probably increase by 15–20 percent as travelers gravitate toward value. However, Southwest can’t fly everyone in the country and the legacy carriers are figuring that they will exact their toll of baggage fees to make up for the lost passengers.
I hope that the increase in passengers will generate far more than $300 million in additional revenues and they find that most passengers appreciate all-inclusive airfares and on-time, solid customer service.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
