Watch out, travelers. Airlines have a new profit plan: surcharges.
Late last month, AMR's
Why? Sean O'Neill, editor of the Budget Travel blog, says it best:
A surcharge is a lazy way to make sure airlines rake in big bucks this year. It's easier to slap a $10 surcharge onto every ticket than doing the complex calculations needed to raise prices by various amounts on thousands of routes ($8 more on one route, $18 on another, and so forth).
Keep in mind that unlike a fee, a surcharge isn't optional or avoidable. No airline employee -- no matter how friendly -- can reduce it. Common surcharges cover fuel, airport usage, and other operating expenses. They're sort of like the city and convenience taxes levied on you when you stay at a hotel.
So even if this airline-initiated surcharge isn't technically a fee -- or, more accurately, a fare hike -- it smells like one. Southwest Airlines
Simplicity is Southwest's competitive advantage as a carrier. Yet simplicity also makes this new surcharge attractive for all of its legacy competitors. Announce it, add a few lines to advertising fine print, and then start collecting the extra revenue.
Passengers won't like this profit plan. I can't blame them; a fare increase is still a fare increase, whatever the carriers call it. Yet this surcharge may be the most effective earnings-booster we've seen in years.
Taxi toward related Foolishness:
- This one-star travel stock may be poised to plunge.
- Should you be flying with Delta?
- Bumpy earnings aren't good for airline investors.
