Delta Follows UAL and US Air on 2nd Bag Fee

Earlier this month I wrote about both United and US Airways charging passengers for a second bag on airline flights. I railed that both airlines were using a penalty fee to discourage traveling families from bringing extra luggage rather than using creative rewards to get business travelers to check their luggage.  Now that the storm surge has died down a little, Delta has copied the same charge scheme.

I really think that the way to win this operational challenge is not to hit traveling families with an extra bag fee, but to figure out a way to get business travelers to check their bags. It's that ubiquitous roll-aboard bag that virtually every business traveler has that slows down boarding and departures.

The article below though points to another airline strategy which wasn't quite so obvious. That is the revenue gained by nickel and diming passengers with "ala carte" pricing strategies. Anybody in the freight business knows that if you only focus negotiations on a base rate, you'll get eaten up by accessorial charges. The air and ocean carriers have learned that and the parcel carriers have perfected it.

As far as the passenger airlines go, I'm ok with ala carte on some things. I'll pay for food. I'll even pay for a choice of movies. These are things I don't have to have but can purchase if I want to.  Operational issues however, like paying for extra bags,  I think should be looked at in another way. Get the passengers to behave in a way that gets them to be part of the solution. Give the business traveler a discount for checking his one bag.  He rarely has two anyway. The discount doesn't even need to be cash. Give them frequent flyer points. A whole new class of elegant solution could be had here.

What I see is too much conventional thought and not enough out of the box thinking.   This is NOT rocket science.  It's appreciation of the role the customer plays in the whole transaction.

clipped from www.btnmag.com Delta To Join In Second Bag Charge  Delta Air Lines beginning in May plans to join United Airlines and US Airways in charging passengers for a second checked bag, Delta president and CFO Ed Bastian told investors at a JP Morgan aviation conference in New York this morning. Bastian said the carrier would charge $25 for a second checked piece of luggage, but did not give further information about which customers or which routes the initiative would impact. United Airlines last month became the first domestic legacy carrier to initiate a $25 fee for a second bag (BTNonline, Feb. 4), and US Airways within weeks joined the carrier in a similar initiative (BTNonline, Feb. 26). However, both United and US Airways have shielded certain customer segments, particularly elite frequent flyers, from such fees. United executive vice president and CFO Jake Brace today at the JP Morgan aviation conference said the carrier sees more opportunity for further unbundling and envisions implementing more a la carte pricing options for passengers. Brace said the second bag fee could yield $100 million in additional revenue for the carrier in 2008, particularly if matched industry-wide. He said other such initiatives are in the pipeline, claiming that unbundling and merchandising options could generate more than $1 billion for United within five years.

Add Freightdawg.com to your social bookmarks!

Comments

[Sasha Green]

It seems to me that it's all part of the "yield management" style of revenue generation. Nevermind encouraging customers to help themselves help you, it's get the maximum you can out of them, whenever possible.

I flew United last week and was offered a seat with 5cm more legroom for $40 when I checked in. A plane change after I'd booked the flight changed up the seating plan.

Since I'm tall and always seem to have someone laying in my lap with their seat back (usually much shorter than I), I took the upcharge, even though it was still economy.

The woman next to me had NOT paid the extra charge for the seat, although I don't know what her fare was compared to mine.

I agree with you that in the end it would be better for the consumer to reduce costs (by encouraging more checked luggage) but it's easier and probably more rewarding for an airline executive or department to show increased revenue by nickle and diming.

Don't even get me started on cell phone or utility bills.