Airlines charging extra for items services that were once free

Airlines charging extra for items and services that were once free
- by Steve Ivey The Business Journal Serving the Greater Triad Area

Will Spivey would prefer quick and painless to death by a thousand paper cuts.

As the managing partner of High Point marketing and advertising firm Trone, Spivey and his colleagues fly around the country every week. And they're hit with extra fees every time: checked bags, seat assignments, booking fees and two bucks for a can of Coke.

Not to mention it's often a coin flip whether they'll make their connection on time or even have a seat on a flight that's been overbooked.

"The overall experience of flying has gotten very unpleasant," Spivey said. "I don't mean to sound flippant about it, but raise the ticket price $20 and let me have a pillow."

This summer, airlines have announced charges for everything from in-flight beverages to aisle seats. This while cutting routes and capacity by double digit percentages.

A typical flight -- one checked bag, a snack and a drink, and a window seat -- might run an extra $30 to $60 or more. And that's just the beginning for potential charges on many services that long had been included in the price of a ticket.

Airlines, for their part, say they are searching for ways to compensate for soaring fuel prices. But business travelers dependent on their service are questioning when the point will come when it's simply easier to take the train.

For a while this spring, American Airlines stood alone when it became the first major carrier to charge for a first checked bag. But slowly the others followed suit.

U.S. Airways, the largest carrier out of Piedmont Triad International Airport with more than 30,000 passengers in June, added the baggage fees in June, starting with $15 for the first checked bag and $100 for bags three through nine. This month, they began charging $2 for non-alcoholic beverages on board.

The company said it expects to raise revenue by between $300 million and $400 million this year with the new charges. Telephone calls to Michelle Moore, a U.S. Airways spokeswoman based in its Charlotte office, were not returned.

At a Merrill Lynch transportation conference in New York this summer, the a la carte pricing was a frequent topic of discussion. J. Scott Kirby, president of U.S. Airways, predicted passengers would actually prefer the itemized charges, rather than pay for what they don't use. Previously, he said, all passengers were paying for checked bags regardless of whether they had any themselves because a charge for transporting them was already built into the price.

"Those who want the infrastructure to check bags will check bags," he said. "Those that don't won't pay for them."

At the same conference, American Airlines CEO Gerard J. Arpey said passengers would have to take the brunt of high fuel prices.

"If we are going to have an airline business, our customers must ultimately compensate us for the cost of flying them around the country and around the world," he said.

Delta, the second-largest carrier out of PTI with more than 22,000 passengers in June, has so far elected to continue checking the first bag for free ( a second bag, however, costs $50). To cut costs, Delta will cut domestic capacity by 13 percent this year.

"Even though oil prices have come down some recently, they are still substantially higher than last year," Susan Elliott, a spokeswoman for the carrier, said this week. "But the complimentary first checked bag continues to be a service we provide our customers."

Don Kirkman, president of the Piedmont Triad Partnership, one of the region's economic development groups, said he and colleagues are constantly flying to visit corporations, enticing them to locate or expand in the Triad.

He said the higher costs have not caused the group to second-guess making in-
person visits.

"So much of this business is done face-to-face," he said. "The incremental charges at airlines have not adversely impacted our travel plans. But it's just the cost of doing this kind of business."

He said he can understand the a la carte pricing, a foundation of Skybus, which opened and closed operations in the Triad this year.

"If you just increase that base rate, you're passing it on to all the customers whether they're using the service or not," he said. "In a way, that cafeteria plan is probably more equitable."

But Tom Dougherty, CEO of Greensboro brand strategy firm Stealing Share, disagrees. He said the airline industry's woes can't be solved by a handful of nickel-and-dime charges. The business model carriers have used for decades doesn't make any sense he said. For example, a ticket from PTI with a connection in Cincinnati or Atlanta before flying to another destination might cost half that of a flight that stops in one of those hubs.

And, he said, tacking on extra fees doesn't help the industry's reputation for poor service. Dougherty, who will log 600,000 miles in the air this year, said he's spent the night in an airport twice during the past two weeks after delays caused him to miss connections.

"If the business of America is business, the airlines are laying down on the job," he said. "I fly because I need to get somewhere, but it's happening more that you can't rely on them to get to point B."

Spivey said he's begun to drive when traveling to visit a client in north Atlanta. And he said he'll be interested in watching the progression of HondaJet, which plans to build light aircraft in the Triad, and the growth of "air taxi" companies.

"We sometimes do have alternatives where we can videoconference," he said. "Once a real substitute for commercial airlines is available, it might put some real pressure on the industry."

Until that happens, travelers like Howie Norwick are stuck with what they can get. He lives in Burlington on the weekends, but he flies to New Jersey for the week for his job overseeing 18 Wells Fargo offices between Boston and El Paso, Texas.

"For business travelers, my time is worth money, so the cancellation fees are worth it if I have to change plans, and I have never checked bags to make it easier to change seats or flights," he said. "But what do you do if you're a family of five traveling for leisure?"

The airlines do make exceptions for some of their preferred guests and members in special programs. But Kevin McGuire, president of the National Business Travelers Association, said he would prefer to see more transparency up-front when booking flights.

"Most companies don't have the expense reporting and accounting policies in place to deal with $3 for a pillow or $50 for a checked bag," he said. "Airlines have to make money. But nobody understands the way they do it."

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