Do travel companies charge too many junk fees?

Susan Jay regrets picking up the phone to make a call from Harrah’s Atlantic City. But she says she had no choice. Her cell phone wasn’t getting a clear signal.

When Jay checked out, she discovered three unexpected charges — one for $26 and two for $45.

Yep, you guessed it. Harrah’s charged her about $5 a minute for the phone calls, an unconscionable markup.

“After a heated discussion with the billing department, they removed the five-minute call for $26,” she says. But that left her with a $90 bill. And the casino wouldn’t budge.

“It’s not enough,” she says.
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Have hotels taken their fees too far?

money2How do you know if hotels have gone too far with fees? When Jay Sorensen complains about them.

Sorensen runs a Shorewood, Wis., consulting firm focused on helping travel companies generate money through surcharges and is a self-described “fee advocate.” But on a recent hotel stay in the Azores, he needed his shirts and pants pressed. A hotel clerk assured him that it could be done the same day.
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When revenue-hungry airlines play “chicken” with passengers

Editor’s Note: Today we join with thousands of other websites to protest two dangerous bills that are flying through Congress and threaten your freedom of expression online. Please do your part to stop censorship by contacting your elected representative.

Here’s a decision most of us will have to make the next time we fly: Should you splurge for a “premium” seat in economy class — an aisle or a window seat — or leave it to chance, and possibly end up in a middle seat?

It happened to Fred Thompson on a recent Delta Air Lines flight from New York to Detroit. “The Delta website would not let me choose a seat when I booked the ticket four weeks early,” he says. “The day before my flight, I still could not pick a seat. All the economy seats were taken and the only available seats were fee-based with prices ranging from $9 to $29.”
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The painful truth about luggage fees your airline doesn’t want you to know

We got yet another painful reminder of how fee-crazy the airline industry has become when this video clip went viral yesterday. As if we needed one.

In it, two soldiers returning from Afghanistan describe how Delta Air Lines charged the 34 men in their unit more than $2,800 in excess baggage fees. The disclosure outraged many and forced the airline to issue a rare public apology.

But behind the incident is a truth the airline industry in general, and Delta in particular, would probably prefer you don’t know: Airlines are not really sorry they charge for luggage. In fact, they depend on luggage fees to turn a profit. Delta collected an impressive $733 million in baggage fees in just the first nine months of 2010, according to the Transportation Department. That’s close to twice as much as the number-two airline, American.
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Would airlines still be profitable if you stripped away fees?

Yes, but hardly.

The nine largest US airlines will collectively report $2.4 billion in quarterly profits on $33.3 billion in revenues next week, according to Robert Herbst of the site

By my calculations, those airlines will have collected $2.25 billion in ancillary fees during the same period. If those fees are all profit (and there’s an argument to be made that a lot of it is) then the industry would have made only about $150 million in the third quarter.
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When should an airline tell you about fees? Survey says …

The sooner, the better.

A survey of 651 readers found an overwhelming majority (80.2 percent) believe airlines or travel agents should quote an “all-in” price that includes any optional fees that traditionally were part of the ticket, such as a fee for the first checked bag or the ability to reserve a seat, when they ask for a fare quote.

A smaller number (17.4 percent) were content to wait until they were done shopping, but before they booked their tickets. Only 2.3 percent say it’s OK to show the total price when they’re ready to buy the ticket. And 0.2 percent — a single respondent — thought the fees should never be revealed.
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Wow, airlines sure are collecting a lot of “miscellaneous” fees — like, more than $2 billion

Here’s the final piece of the ancillary revenue puzzle. It’s an amorphous category known as miscellaneous operating revenues, and although we may not know that much about it, we do know there’s a lot of it being collected by airlines. Like, almost $3 billion worth of it last year. And probably about the same amount in 2010.

I won’t bury the lead: Between miscellaneous fees, baggage fees and reservation change fees, the U.S. airline industry will probably collect an astounding $9 billion or so from us this year.

Nine. Billions. Dollars.


So let’s take a closer look at this last piece, then.
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By unbundling, airlines make a bundle

What’s an airline ticket?

Is it just an agreement to carry you from point A to point B? Or is there more to it?

Airline executives seem to think that a ticket is a seat on a plane, and that’s all. Lately, the industry has been busy unbundling services that traditionally came with a seat, such as baggage checking, seat reservations and even the ability to pay by credit card.
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A losing fight? Airlines earned $10 billion from fees last year, up 345 percent

ishot-2My friend Addison Schonland said it best: Anyone who thinks baggage fees are going away is living on another planet. And as if to underscore that point, IdeaWorks has released a survey that shows ancillary revenue is up 345 percent from 2006, to an eye-popping $10 billion last year.

Is this a losing fight for airline passengers?

I’ll get to the answer in a second. But first, let’s have a look at these incredible numbers.
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