That $25 Checked Bag Service Only Costs Airlines $2

[marmar]

(Time) Airlines say that they must charge passengers baggage fees because more checked luggage means more costs incurred by the carrier. But how much extra jet fuel is burned due to luggage? Maybe $2 per bag tops.

That’s according to some analysis conducted by the Detroit Free Press, after extrapolating the costs (and savings) of lighter-weight equipment mentioned in an American Airlines report. Neither American nor airline industry groups refuted the estimate. “Your numbers I guess are correct,” an American Airlines spokesman said.

So how does the airline justify charging $25 for a service that costs the company only $2 in jet fuel? “It’s not directly linked to that,” he said, referring to the fuel costs incurred. “It’s a revenue stream.”

And a pretty impressive revenue stream at that! For every checked baggage fee paid to the tune of $25—fees that travelers increasingly deem to be “reasonable,” and that sometimes cost far more than $25—the airline only coughs up around $2 out of pocket. ......................(more)

The complete piece is at: Checked Bag Fees: You Pay $25, But Service Costs Airline $2 | TIME.com http://business.time.com/2014/02/05/that-25-checked-bag-service-only-costs-airlines-2/#ixzz2sT1KKpfd

[jsr]

1. Airline Profits To Hit Record High

http://business.time.com/2013/12/12/airline-profits-to-hit-record-high/

[gerogie2]

29. Umm, Airlines are supposed to make a profit.

Flying is a luxury. Others can always take a car, bus or train to any where in the USA.

[Brickbat]

2. "It's a revenue stream."

Sums up so much.

[Arcanetrance]

3. They have to make up the free bags for their credit card holders and frequent fliers

So everyone on the bottom has to carry everyone on the top. That seems to be a constant theme these days

[Fumesucker]

4. They have whole divisions of people who do nothing but dream up stuff like this n/t

[HereSince1628]

5. Revenue stream...iow...all the traffic will bear

Certainly not surprising to those of us who remember that the heroes who capitalist propaganda tells us "paid for the building of America" were also known as The Robber Barons.

[joeybee12]

6. Airlines now make their profits from "fees" not from the actual

cost of the tickets.

[elias7]

7. Well, there are some other costs in there

There is a clerk who we sign in with whose job is to make sure our luggage remains physically attached to our flight(s), laborers who move the bags to the plane, load them, unload them, transport them back to the terminal or to another plane. There is a profit built into any service.

Kind of an unfair article. When I worked at Burger King as a teen, we sold coke for .35, .45, and .55 for S, M, and L sizes, the cost to BK was .04, .05 and .06. Drinks, not sandwiches is where the profit was.

[Munificence]

38. Yes

and there is equipment to maintain to haul luggage. Benefits for employees that do this, taxes, and other operating costs.

When it comes to "finance, business, and the economy", one can simply look at the lack of involvement in the "economy" section here and assume a lot about us.

For laughs:

I weigh just over 160lbs, so why are they charging me $300 when all it costs them is $6.xx for my weight in fuel?

[tabbycat31]

39. I worked the concession stand at a movie theater in HS

A small popcorn was $2.50 (that was 1996) and I know it cost the theater less than 50 cents. Drinks had just as insane of a markup.

However, the theater did not make any profit from the movies themselves, and most moviegoers know this and expect insane food markups.

[Major Nikon]

8. Jet fuel doesn't reflect the total cost of flying bags

Aircraft have to be designed to carry baggage and people/equipment have to be paid to process, sort, load, and unload baggage.

I have no doubt airlines are making money over and above what they are charging for various fees, but I have no issues with airlines making money this way. I can (and do) travel all over the world with nothing more than a carry on bag. If you don't want to pay the fee, pack light, or chose an airline that doesn't charge the fees.

[marmar]

9. There is only one airline that I know of that doesn't

[Major Nikon]

11. Southwest and Jetblue don't charge for the first checked bag

Between those two you can get between most major cities in the US.

[Heywood J]

15. Amtrak and my car don't charge at all for a second bag.

I remember when I used to actually be able to bring back souvenirs of places I'd been, plus things to give as gifts on returning.

I guess I should just feel lucky if, during my trip, no one drops grandma's ashes on the floor and laughs, or if the patrol dog doesn't bite me in the stomach.

[Major Nikon]

18. Many times I just mail them back

I have my own airline (consisting of exactly 1 plane), and I don't charge myself for the 1st or 2nd bag, or any others. However the plane does have a weight limitation, so depending on how much people and fuel I carry, baggage sometimes gets limited. If I'm taking 4 people, more bags means less fuel and fuel comes in kinda handy. So if we want to buy souvenirs we just box them up and send them parcel post. Works with extra baggage as well if you have some place that will hold it at your destination.

[Common Sense Party]

30. Southwest doesn't charge for the first 2 checked bags. nt

[KentuckyWoman]

10. so freaking what.

I don't care how they price their products or even if they are wallowing in profits. What I care about is do they treat workers and customers well.

[Major Nikon]

13. Most airline employees are well compensated in pay and benefits

There are some exceptions, but if you consider the airline industry against the average in the US, they are far better off. The inflation adjusted cost of air travel has been pretty much stable over the last 15 years even with fees and if you compare it with the 80's and 90's, it's considerably cheaper.

[LeftyMom]

16. Pilots on regional carriers make poverty wages. nt

[Major Nikon]

20. That's why I said there's exceptions

Not all regional carriers pay shit wages to pilots, but some do. There's also the fact that even the ones making shit wages are still building flight time which they can use to get a higher paying job. There's lots of pilots out there building time on their own dime which is extremely expensive. Twin engine time will generally run you upwards of $200 per hour and major airlines require hundreds of hours before they will even look at you. That's why there's so many pilots out there willing to work for shit wages. Granted the regional airlines are exploiting them, but it's not as bad as one might think.

[Beacool]

12. $25? That's cheap.

United has the nerve to charge $70.00.

[Bazinga]

14. And how much would it cost you to ship that bag with UPS?

No doubt it would be north of $100. Sounds to me like they're saving you money, not to mention the convenience of having your bag with you right when you get there.

The decision to purchase a good or service depends only on its value to the customer. It has nothing to do with the cost to produce that good or service.

[uppityperson]

21. Charging and extra $23 is "saving you money"? Huh.

[Bazinga]

22. $25 < $100

[uppityperson]

24. $0<$25 AND $2<$25

Last edited Sat Feb 8, 2014, 01:01 AM - Edit history (1)

Edited because I GASP did a typo, my middle finger hit the wrong key making it be backwards, and therefor invalidating my whole argument.
Oh the Huge Manatee!!!!!11

[Bazinga]

25. ummm... false and false.

[uppityperson]

26. Oh dang me for my typos! I will go hang my head in shame.

Hope you got a laugh out of it. Now, to go correct it.

[Bazinga]

34. I did chuckle a little bit to myself.

But I promise I didn't ROFL or even LOL. You have to admit, that was a little bit bigger typo than "and" instead of "an" (which you did in your first reply to me).

As for the idea that $0 < $25, I'll have to correct it just a little. Now I've added a bit of my own opinion, but I do think you'll still agree with me.

$0 + $100 to ship your bag some other way > $25.

Or if you prefer;

$0 + buying all new clothes when you get there > $25.

[uppityperson]

44. When I buy groceries, I am irked when the teller cheerfully says "you saved this much". No, I spent

THAT much. I "saved" even more by not buying all the stuff still on the shelves too! No, I spent money by coming to the store and don't need you to pat me on the head telling me I was good for buying the week's specials while trying to manipulate me into thinking I have more money after shopping than I did before. Yes, I am uppity.

I get the point that it costs less to pay an airline than to ship a bag, which I also have checked out, and know it is simply revenue for the airline. If I were one of their business managers, I'd charge $5 more, checked bag free and a free snack beyond pretzels. People would notice and appreciate and be more loyal with even a minimal perk that was built into the fee.

[Gormy Cuss]

45. Shush! You're not supposed to notice that.

You're also not supposed to notice that the shelf price is artificially high in order to make those "savings" seem more impressive. Nearly every market basket study of grocers showed that the "savings" for affinity card holders were illusory.

[BlueCheese]

17. To be fair, quite a few other businesses have high-margin add-ons to basic services.

There's really no rule that companies should only charge the marginal cost of providing a service. There are all the fixed costs of running an airline, which are enormous.

Restaurants have much higher margins on drinks than food, for example. I don't think anyone thinks restaurants should only charge a nickel for a glass of Coke.

[JI7]

19. they are trying to make money and this is an easy way to do it

i would prefer fees for bags than higher ticket prices.

[Nye Bevan]

23. And how much does it cost a movie theater to make a large soda that they sell for $5.75? (nt)

[Art_from_Ark]

31. If you're at a movie, you don't need a large soda

If you're traveling by plane and planning on staying at your destination for more than a couple of days, you will probably need to check at least one bag.

[Nye Bevan]

41. No. You can ship your stuff using UPS, FedEx or the Post Office (nt)

[Art_from_Ark]

47. No you can't

First of all, there is no guarantee that things shipped through any of those delivery services will even arrive at the destination in time for them to be of any use. I saw that first-hand when I worked at a hotel and one of the guests had become extremely distraught because he had actually tried to send something to the hotel by courier, and it was not there when he needed it.

[Nye Bevan]

48. I've done it successfully many times (nt)

[Art_from_Ark]

50. I've seen it done unsuccessfully

I wouldn't try it.

[LibDemAlways]

27. At some point in the not too distant future airlines

will install credit card readers on the lavatory doors and passengers will be charged who knows how much to enter. I wouldn't put it past them.

[Art_from_Ark]

32. I've always suspected that one reason for the "no liquids" rule at security

is that the shops on the other side can charge 2 or 3 times the normal local price for beverages.

[LibDemAlways]

42. If they ever do start charging to use the lavatory,

you can bet the airlines will start selling water at the boarding area. Have to fill passenger bladders to the max in order to increase on board revenue.

[Art_from_Ark]

46. The way things are going...

I can just imagine that's how it'll end up. Of course, it'll start out as as one free use of the lavatory for domestic flights, which you can enter by using your boarding pass as a sort of digital key. Subsequent visits will be charged to your credit card.



or maybe

[NYC Liberal]

54. Until people start wearing diapers.

They'd get rid of that policy real fast as soon as the odor hit. Full diapers + confined space with no possible way out = recipe for disaster.

[LibDemAlways]

55. I agree. It would be short lived once the

you know what hit the fan.

[Logical]

28. FedEx makes profits shipping packages also! nt

[Hekate]

33. For the real scoop on airline fees I recommend "Cheap Flights" by....

....Fascinating Aida posted on You Tube. (I tried to get the link but for whatever reason I can't seem to see the link on the iPad I'm using; sorry.) it's hysterically funny.

The point of all the fees, as I understand it, is that market studies have shown that Americans will put up with almost anything from airlines as long as they imagine they are getting a steal of a deal on their fares. So the airlines give customers what they say they want -- low fares; then add it all back in the form of fees. Then while they're at it, they invent some more.

After feeling thoroughly jerked around while trying to book an economical flight several years ago, I simply added up the fees plus fare and considered the result as the true fare for comparison purposes. It's a stupid game -- but it appears to be the only game in town at present.

Meanwhile, singing Cheap Flights keeps me cheerful.

[LibDemAlways]

43. I worked as a travel agent for a few years

back in the 80's before the airlines decided to fleece the public at every turn. It's ridiculous the lengths they will now go to to make a buck these days. My personal favorite is charging more for a "preferred" seat and charging for a seat assignment made by an agent over the phone. As I said elsewhere on this thread, pay toilets are coming and it may even reach the point where passengers are charged a boarding fee at the gate and another fee to exit upon landing.

[moparlunatic]

35. Flying is

horrible for the environment. I'd like to see it gone.

[Major Nikon]

37. Compared to what?

Walking, biking, or moped perhaps, but everything else has a carbon footprint that isn't much better or is worse than flying.

Train or vehicle travel is only better if you don't consider the environmental impact of the infastructure, which is significant.

[xchrom]

36. du rec.

[Eleanors38]

40. "...you paid for yours, got mine for free" last 3 flights...

They always ask for volunteers to check bags to final destination for free due to limited overhead space. In goes the old duffle!

[FarCenter]

49. The small percent of bags that don't arrive with the passenger are very costly

The airline has to track them down and deliver them to the passenger's destination. These cost way more than $2.

[rickford66]

51. They are heavily subsidized

Taxpayers pay for most or all airports and for the military training for a vast number of pilots. They should charge for carry-ons instead of checked bags. That would speed up boarding and disembarking times which cost money. Also enforce the carry on size limitations.

[dlwickham]

52. one of the reasons I like Southwest

they don't charge for bags

[MillennialDem]

53. Honestly I'd rather them charge for carry on than checked bags.

Only thing stopping this of course is the small percentage of bags that get lost, misdirected, or stolen. I get sick of arriving on a plane while packed light and end up having to figure out some kind of gymnastics to get nothing more than my laptop backpack (with laptop, 1 change of clothes, and a toothbrush) in the overhead bin or under my seat?

This after witnessing the inconsiderate jerks in front of me stuff two large rolling suitcases in the overhead bin.

Oh and did I mention I'm 6'2 so the bag doesn't really fit under my feet? If I can't get it in the overhead bin I end up putting it on my lap once we take off.

Solution to this is only allow very small carry on bags and charge for large carry on bags and make checked bags free (or very small fee, like $5).