US Announces $25 Fee for Second Checked Bag

[Matt Molnar]

Following United's lead, US Airways will begin charging $25 to check an extra bag beginning May 5th on flights booked on or after today. Dividend Miles Preferred members, First Class and Envoy passengers, Star Alliance Silver and Gold members, active military personnel in uniform, unaccompanied minors, and passengers checking personal assistive devices are exempt.

[LGA777]

As a US employee, this announcement does not make happy or proud, but it also does not make me angry either. While some will say it is another example of an airline nickel and diming it's customers, we are entering a new era in commercial aviation due to the rising cost of fuel, and this is probably just the begining not just at US, but at most US carriers. Here is an excerpt from an employee memo from US President Scott Kirby about what I mentioned above.

In the short term, high fuel costs are our new reality. Oil topped $100 a barrel this month and it appears that the days of $30 or even $50-a-barrel oil are gone forever. The impact on the airline industry is very significant. In our case, higher fuel prices are projected to add $800 million to our expenses in 2008. When you consider that our entire profit in 2007 was $440 million (excluding special items), the impact is stark.

There are several ways to offset this impact. Raising fares is one way, but raising fares is only possible when supply and demand are balanced. When there are too many seats in the industry chasing too few passengers (as is the case today), passengers will move their business to other airlines with lower prices. This means we have to look for ways to 1) raise revenues to protect the financial health of the company, 2) stay competitive in the industry, and 3) give customers what they truly value.

This requires us to think about the business in ways we may not have five, 10 or 15 years ago.

That’s where we are today. And we’re moving carefully. Rather than issuing a blanket charge for any second bag, we’ve looked at it with a closer eye and will not charge our best customers –Dividend Miles Preferred or Star Alliance Silver or Gold members. Nor are we charging members of the military or our employees, or charging customers checking assistive devices.

This means that roughly 8 percent of our current customer base will be affected by the change. Even so, the impact on revenues and costs will be significant.

Regards

LGA777

[Matt Molnar]

I for one don't have a problem with it...there are not many circumstances I can think of where I would need to check more than one bag, and if some extreme case did arise, I would not mind paying the extra fee. The $100 per bag fee for bags #3 through #9 sounds a bit steep, but if you think about how much it would cost to ship a suitcase via the same day services offered by FedEx or UPS, $100 is a bargain.

[Art at ISP]

This is what they should have done in the first place. This plan, while distasteful to some, charges those who traditionally pay less for extra services, and does not penalize anyone who does not choose to check a second bag.

That said, next they need to rescind the elimination of the 500 mile minimum accrual, because absent that, premium revenue will decline at a much more rapid pace than that boneheaded move could ever save them.

Sorry to say, US is still mostly anti customer, and I fear they will pay the ultimate price in the end.

The number of FFOCUS members bolting now from US to ANY other airline is just amazing, even for me.