When it comes to being a consumer, I'm about as picky and quirky as they come. I have no qualms about spending money on food, my car, and a number of other things that I quantify as essential. However, if you try to get me to pay for parking, for example, I transform into Mr. Cheapskate. Don't ask me why, but it's just one of those fees that irritates me, unless I'm trying to park in New York City or Boston, where parking is merely a figment of your imagination.
Just this week as I leaped into my two-week vacation, I came across another one of my most loathed fees: optional airline fees. Airline fees these days are considered "optional" because they include any perks that you wind up choosing beyond simply purchasing a ticket to get you from point A to point B. They can include everything from your baggage and carry-on luggage to supplies such as food or a pillow and blanket.
Optional fees: A necessary evil
As you might imagine, some airlines rely on optional fees more than others do, but the end result is often the same: extremely high margins. You see, most airlines are opting to turn to fees to make up for the rising cost of jet fuel, plane purchasing costs, maintenance, and even labor costs, because these fees involve very little overhead themselves.Spirit Airlines, for example, can coax its customers into checking in a bag online to save nearly 50% compared with checking in a bag at the airport. Since its customers are taking care of this part at home, Spirit saves valuable time that a customer could have tied up with a representative at the airport, and it pockets practically all of these fees with little overhead. It's these hated fees that are valuable to sustaining the profitability and margins for a number of airlines.
The truth is that these fees are only growing more pervasive. As IdeaWorksCompany, a consultant to the airline industry, recently reported (link opens a PDF), airlines collected $31.5 billion in optional fees in 2013, up 16% from the previous year and 1,186% since 2007.
Some of this increase had to do with the addition of six additional airlines into IdeaWorksCompany's calculations, but it also stemmed from organic growth in optional fees from existing airlines that charge fees, as well as from other airlines that adopted first-time optional fees on their flights.
But here's the good news: There are airlines you can fly with that may allow you to dance around your most disliked fees. While no "perfect" airline exists in terms of optional fees, there are ways you can focus on what makes you happy while avoiding spending extra money out of your pocket.
Dislike checked-bag fees?
Checked bag fees tend to rank pretty high up the list in my own column of dislikes, and I think that has a lot to do with the fact that roughly six years ago they didn't exist. What this means is that many longtime fliers are still having a hard time adjusting to the charge. The good news for fliers is there are two airlines that could get you around this charge.
JetBlue allows its fliers to check their first bag for free, although the charge for a second checked bag at $40 is among the highest in the industry. If you're traveling with just a single bag, JetBlue isn't a bad choice to save some cash.
However, Southwest Airlines (NYSE:LUV) has long since prided itself on being the "Bags Fly Free" airline, and it shows through its optional charges. Southwest is the only major airline company out of the 14 that serve the U.S. markets that'll allow consumers to check two bags completely free.
While it's great to save money, this is also a big loyalty booster for Southwest. Although the company does have a PR goof every now and then (as it did just this past week), the prevailing trend of its Bags Fly Free program is that it creates a loyal customer base. Loyal customers allow some predictability to Southwest's cash flow and give it better visibility than many of its peers have.
Dislike domestic ticket change fees?
Let's face it: Life happens, and sometimes that means our plans change. While things often can be shuffled around with ease, that's not always the case with the airline sector. In fact, if you need to change your ticket following booking, there are only two airlines that even give you the opportunity to complete this change without a fee.
National standout Alaska Airlines is one, as long as you give the company plenty of advance notice. According to Alaska, as long as you give the company more than 60 days' notice of your trip change, it can adjust your ticket free of charge. Once you dip below that 60-day window, though, you'll be facing a somewhat middle-of-the-road $125 ticket-change fee.
Once again, if you're willing to book with Southwest Airlines, you'll have the opportunity to alter your domestic travel plans without spending a dime. According to Southwest's website, there is no charge for a ticket change regardless of when it's requested. This is another way Southwest has been able to build a loyal customer base. If fewer customers are bailing for other airlines, then Southwest should be able to maintain its reasonably low and competitive prices.
Dislike booking fees?
Another fee fliers may potentially gripe about is paying to book their flight directly with an airline representative in person or over the phone. Chances are good that the airline representative you're calling or speaking with in person with is going to charge you to reserve your trip. In reality, 11 of the 14 U.S. airlines do charge some form of booking fee. It this fee gets your goat, here are three airline alternatives.
For fliers using a predominantly regional airline, Frontier Airlines may make a lot of sense. Because of Frontier's limited routes compared with a number of other airlines, it tends to offer a discounted ticket price to lure in consumers. Of course, consumers should also realize that while no booking fees exist and the ticket price is low, some of the other optional fees attached with Frontier could be higher than its peers.
Air Canada also offers a somewhat limited service schedule, but it'll have its customers cheering with its free booking services. However, aside from a free carry-on bag, Air Canada passengers will be paying for every other optional fee imaginable.
The real winner here (again!) is Southwest Airlines, which allows its fliers to book over the phone or with a representative in person free of charge. Again, it's not hard to understand why Southwest's share price has been flying higher over the past year, with so many avenues for fee-loathing passengers to dance around.
Dislike paying for food?
OK, so perhaps food isn't exactly "optional" -- I mean, we all have to eat, right? But I can recall a time when airlines regularly included your meal, or at least snacks, with your ticket free of charge. Nowadays that's a luxury, and most airlines do indeed charge a fee for food, including snacks. Three airlines, though, still offer the ability to grab a snack, which can range from peanuts or pretzels to chocolate-chip cookies, free of charge.
Surprisingly, one of the majors, Delta Air Lines, still offers some variety of complimentary snacks. They aren't exactly going to fill you up, but it's these little factors that Delta hopes will create an emotional bond that could lure a flier into remaining loyal to the brand. It also doesn't hurt that majors like Delta will ingrain loyalty by encouraging passengers to sign up for its frequent-flier credit cards.
The final two remaining airlines are Southwest Airlines (who didn't see this coming?) and its AirTran subsidiary, which both offer complimentary small snacks on their flights. Not to beat a dead horse here, but keeping your passengers happy from entering one airport to leaving the next is a great way for Southwest and its subsidiary to build a rapport with its customers.
Southwest stands out, but remember this
As you can see, if you're a fee-phobic flier, Southwest Airlines really stands out as having some of the most attractive freebies. Of course, this lack of optional fees can come with a price. Since Southwest doesn't partner with any of the online booking agencies such as Priceline Group or Orbitz, its upfront ticket prices can be higher than many of its peers. However, what perks passengers get in return appear to far outweigh a small bump in ticket prices relative to some regional or national airlines.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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