How 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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Amtrak is raising its luggage fees on Sept. 10, the national rail carrier disclosed on its website today.
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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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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: Airline 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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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 AirlineFinancials.com.
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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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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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.
Wow.
So let’s take a closer look at this last piece, then.
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