Looking at the chart, does it surprise you that United Airlines announced today that it was increasing its checked baggage fees from $20 to $25 for the first bag? And from $30 to $35 for the second? ($23 and $32, respectively, if you prepay online.)
In the past few days, United has joined Delta, US Airways, and Continental in raising the baggage fees. The United policy goes into effect tomorrow (Thursday, January 14) for flights on or after January 21 within region 1 (North America, Hawaii, Caribbean).
For all the public’s (and my own) bitching and whining about the proliferation of fees, this stock chart really says everything you need to know about why these fees continue to proliferate. Wall Street likes these fees, as they generate a steady stream of revenue. “Free money,” they say. Never mind that the same customers who today are coughing up the money for these fees might be migrating to another carrier (like Southwest) if they can manage it. But Wall Street short-term thinking is what’s driving this. And the increase in these airlines’ stock prices today — that’s the CEOs’ vindication.
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January 13th, 2010 at 8:46 pm
Whatever, as long as the airlines continue to be bailed out like clockwork by the government they can do nothing that’ll make them losing travelers hurt enough to stop doing it. The baggage fees were supposed to be for increased fuel costs, but they didn’t go away when fuel costs plummeted.
Of course you know all this means is people will continue to sneak bigger and bigger carry-ons to their seats.
January 13th, 2010 at 8:47 pm
Twitter Comment
Ha, good point. RT @upgradetravel: This is all an airline CEO sees when you complain about baggage fees [link to post]
– Posted using Chat Catcher
January 13th, 2010 at 8:50 pm
I agree, it’s all about $. The problem is that if many of us stop flying much because of this, they are going to have even less fuller planes. Hubby and I are talking about driving this summer to avoid the hassle and expense to fly. Normally, we fly 2-3 times for personal reasons a year. Long-term, this could be a problem for the airlines. Those with families of at least 3-4, this is a considerable expense to put up with.
January 13th, 2010 at 11:02 pm
[...] Don’t think so? Click here for a good example, if you somehow still need one after the recent economic meltdown. [...]
January 14th, 2010 at 2:44 am
Interestingly, Southwest’s stock ticker went up right around the same time as UAL’s. Those were the smart investors.
January 14th, 2010 at 5:45 pm
[...] provided health insurance to 3000 families; Junk Insurance Tax; a picture worth a thousand words on checked baggage fees (between the airlines and the TSA are they actively trying to get me to avoid [...]
January 16th, 2010 at 7:29 am
Only a fool uses short-term thinking when valuing a stock. Savvy investors weigh all factors, including long-term dynamic effects, to arrive at a price. In other words, when a fee increase is announced, the wise investor will see the obvious boost to short-term revenue, but will also weigh the expected long-term effect on passenger load (driven by customer satisfaction), etc. If the stock price rises when the announcement is made, it indicates that investors are betting it was a good move not just short-term, as you claimed, but long-term as well. This doesn’t mean they are always right, but it does mean they like what happened and what it means for the company profits.
I believe airlines aren’t charging enough for bags and many other ala carte services. I hope they will add more over time to help the business model and increase profits, stabilities, and the quality and range of services offered.