I was happy -- yes, happy -- to see Spirit Airlines announce in early April that it would begin charging passengers for carry-on luggage. So imagine my aggravation upon hearing that several lawmakers have been getting a bunch of airlines to promise not to do likewise.
Few people seem pleased about airlines' new carry-on fees. Air travelers are quite reasonably fed up with all the extra expenses they're now being charged. Remember when your bags, carry-on or checked, flew with you at no extra charge? Remember when airlines offered complimentary meals? Even pillows and blankets are no longer free on some airlines.
And here comes Congress ...
By targeting these fees, Sen. Charles Schumer (D-N.Y.) and others probably seek an easy win among voters. They reportedly have secured no-fee agreements from five major airlines: AMR's (NYSE: AMR ) American Airlines, Delta Air Lines (NYSE: DAL ) , UAL's (Nasdaq: UAUA ) United Airlines, US Airways (NYSE: LCC ) , and JetBlue Airways (Nasdaq: JBLU ) . (Continental Airlines (NYSE: CAL ) may be a holdout.)
But if the lawmakers really believe in what they're doing, they're missing the point. The airline business is notoriously difficult, besieged by volatile fuel costs, fare wars, unpredictable weather, complicated routing logistics, expensive equipment, and even the occasional volcano. Of the carriers listed above, only JetBlue has eked out a profit over the past 12 months.
Since JetBlue made its IPO in 2002, and United, Delta, and US Airways all have entered and exited bankruptcy protection, only a couple of the airlines mentioned above have a 10-year stock history -- and both of them reported losses in that span. Within the industry, Southwest Airlines (NYSE: LUV ) is a rare exception, having been consistently profitable over many years.
Pay less here, pay more there
When rising fuel costs and fare wars put pressure on airline profits, many carriers end up cutting back on their services, or charging more for them. According to an AP report citing government data, among 26 U.S. airlines, "so-called ancillary fee revenue accounted for 6.9% of their total operating revenue in the third quarter of 2009, up from 4.1% a year earlier."
By adding fees, the ticket prices can seem relatively low, while the companies save or make money by not offering meals or by charging for things such as sandwiches or checked bags. These new policies may sadden many of us, but they also lead us to change our behaviors.
When one carrier starts charging for checked bags, and realizes a financial edge by doing so, others tend to follow. Soon many are charging, and passengers respond by carrying on more of their bags. That's exactly what happened in real life, and the growing competition for precious room in overhead compartments increasingly slowed down passengers' entrances to and exits from their flights.
Spirit Airlines' plan to charge for carry-on luggage should reverse that trend, making getting on and off planes faster. Yes, the fee is unwelcome, but come on -- if airlines weren't charging these fees, they'd likely be hiking their fares.
If I have to choose between footing the bill for carry-on fees that make flying more pleasant, or paying a slightly higher base fare with no carry-on fees, I'll opt for the more pleasant option.
Are you for or against carry-on fees? Share your thoughts on modern air travel -- leave a comment below!
Airlines are only one of the industries that exhibit signs of being terrible investments.