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Airline's 6 Billion Dollar Cash Cow

Discussion in 'Misc. Vegas Chat' started by Jimbo338, May 14, 2013.

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  1. Jimbo338

    Jimbo338 VIP Whale

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    Mentioned on the NBC Evening News tonight, baggage fees and other fees initiated by airlines totaled 6 billion dollars last year and likely saved some airlines. I guess business travelers who account for a great deal of revenue can pass it along to folks enjoying a long awaited vacation or a family reunion but like resort fees are kind of a hidden fee to make some airline's service look like a better deal. While many seasoned traveler understands many or most of the fees it is time consuming when comparing times, convenience,location, and comfort as well as cost.

    Personally instead of resort fees when traveling, I would prefer one price, and then hotels can justify the price with the value included for those who want the next level of service. Likewise to chase similar values in transportation, only to find after considering airports, times, date choice and so on, and then realize that you have to add $50 for baggage and more for other ridiculous things that are really a cost of business. Yes there is another side of the story, the airline's six billion dollar windfall. Has that money improved frequency of flights, better on time records, better service, faster luggage retrieval and fewer lost luggage claims? Thank you Southwest, I'll have the plane cookies with my peanuts!

    Jimbo338
     
  2. thecarve

    thecarve Misanthrope

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    I refuse to fly Southwest. Why should I have to pay for someone else's luggage when all I have is a newspaper and a phone?

    (Just playing devil's advocate.)
     
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  3. VegasBJ

    VegasBJ VIP Whale

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    No, but it likely has kept some of them in business or out of bankruptcy (again). Then there would be more of a monopoly, and the prices would continue to rise with less competition.
     
  4. nostresshere

    nostresshere Mr. Anti Debit Card

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    I am thinking you are saying that because you pay a flat rate no matter if you have luggage or not, you are therefore paying the same as those that have luggage, and therefore are helping to pay for their luggage.

    That is one way to look at it.


    Meanwhile - to add some facts.

    The airlines took in $159.5 billion in revenue last year, with $3.5 billion in luggage fees. Not peanuts, but still not terrible either.

    The reason they do this is because the of the average flyer. These are people that prefer a LOWER price for the ticket. If everyone would buy more expensive tickets, the airline would include baggage.

    As to people that pay these fees... we travel monthly and rarely pay them. Delta and American credit cards waive them. SW does not charge them. We are covered.
     
  5. Jimbo338

    Jimbo338 VIP Whale

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    I get your point, thecarve, but I'd still rather pay $225RT on Southwest and pay for someone's luggage than pay $480 and not. I wish I could fly with just a newspaper and a phone, but the other 8 days would be tough, lol!

    The fact that it has kept more competition is a good point, as it gives us choices. My choice to change to SWA wasn't because of cost, it was after being stuck 2 year in a row with an airline that was late more times than not, lost my luggage, used commuter planes which I am uncomfortable in, and was more interested in passing the buck than real customet service. SWA is certainly not for everyone but had consistently provided me with better times, customer service, choices, baggage retrieval all at a lower price.

    Jimbo338
     
  6. engicedave

    engicedave VIP Whale

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    I think airlines should charge by passenger and luggage weight, just like mail/Fed-Ex/UPS

    It takes fuel to propel weight and it takes additional fuel to propel access weight.
    Example, it cost less to fly the 150 pound passenger than the 300 pound passenger

    If you don't like that idea, don't pack like a clothes horse and/or just pay for your bags.
     
  7. Jimbo338

    Jimbo338 VIP Whale

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    Engicedave,
    There's an interesting idea, albeit scary to me, lol. Actually, my last trip I went with just carryon, and skipping the luggage part was nice but wouldn't be practical for long trips, people with kids etc. Kind of made me think of going out one day to pick stawberries (pick your own operation). You bring your container which they weigh and record. Then you return, they weigh your full container and subtract the container weight and charge you for your fruit. I couldn't help to think it would be smarter to have people step on a scale holding the container and then step on the scale when done picking and subtracting the first weight to get the weight!

    Jimbo338
     
  8. ken2v

    ken2v This Space For Rent

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    But the bulimics binge-eat more food and then cough it up all over the plane.

    The market is regulating this particular issue and I'm happy to have it remain there.
     
  9. shifter

    shifter Degenerate Gambler

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    the bottom line is most people lack enough common sense to be able to connect the dots and figure out that they're paying more with fare+fees than they used to pay with fare alone. they see the low fare and that's all they can look at and then when all the other fees add up to a huge additional chunk, they can't see it. that's why these type of nickel and diming routines work so well these days. in case you haven't noticed, there's not a lot of common sense left out there these days.
     
  10. LV_Bound

    LV_Bound VIP Whale

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    The reason why there isn't a single fee is to avoid comparing apples to apples.
    Whether you are buying a car, getting an estimate for a new kitchen, airline ticket or many other things they know people are simply looking at the bottom line price and don't factor in all the extra (or hidden) costs.
     
  11. Kickin

    Kickin Flea

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    There's an airline that is planning to do this. Samoa Air, it was all over the papers a month ago. Passengers will pay based on their combined bodyweight and luggage weight.

    I saw a documentary on airlines a while back and they've gone through extraordinary lengths to reduce weight on airplanes. They broke down literally every single thing inside of an airplane and calculated what it cost to transport in terms of its weight vs its benefit. Even things like the magazines and the types of cups they use was analyzed this way.

    I think there's a decent chance we'll see them charging luggage by the weight someday though they probably won't go as far as Samoa Air and actually weigh each passenger. It would be funny though if they did. :)
     
  12. shifter

    shifter Degenerate Gambler

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    well, hell, it's Samoa air ... i'm sure charging the passengers by weight makes a lot of sense there ...
     
  13. oc_guy

    oc_guy Low-Roller

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    Just an interesting tidbit, but the aggregate commercial airline industry as a whole has never been profitable. From 1954-2011 net profit of -$34B.
     
  14. earth-3

    earth-3 High-Roller

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    There is a 20% tax, paid to the government, on the ticketed price of each seat. It may even be increased to 25%, if certain revenue taxation's are approved by congress in the near future. This government tax is not charged on the other income streams generated by the airlines. That is why the luggage fee's were broken out of the ticket price. Southwest initially offset their luggage expense because they did away and saved on food cost while others still included lunch or diner on the appropriate flights. In time, all the major carrier's did away with free food service as well. The major airlines offer newer and larger planes, more flights, international service and presence in the key airports of many more major markets. Southwest's operating expenditures are smaller since they are in local U.S. markets, don't have as many destinations, have limited flying times, no jumbo jets and no seat reservations; so they can presently still offer free luggage travel. I don't believe it will last forever.
     
  15. warpdrvr

    warpdrvr Low-Roller

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    I heard this on the radio yesterday and was staggered that there was so much extra money "made" by charging for luggage.

    One of the consultants they talked to said for him it's actually cheaper to ship his luggage via UPS/FedEx. Sends it right to the hotel he's going to. I'd think the extra hassle in doing that makes paying the luggage fees comparable.
     
  16. Bubbavegas

    Bubbavegas VIP Whale

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    Would make a bunch of sense in the US as well, Samoa sure does not have the market cornered on single passengers who weigh what two combined do.
     
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  17. zamboni

    zamboni VIP Whale

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    Ticket costs are at an all time high, but these fees alone are making them money. Where is our savings? My buddy said he remembers not too long ago $250 would get him airfare and a 5 night stay on the strip. Now you are lucky finding tickets alone for just under $400.
     
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  18. smartone

    smartone VIP Whale

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    When did it become "evil" in America to make money?
     
  19. thecarve

    thecarve Misanthrope

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    Jeez smartone...where have you been?!
     
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  20. VegasBJ

    VegasBJ VIP Whale

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    Not only making money, but surviving. It is a demand market, and every flight I have been on past couple years are 100% full. NO shortage of fliers willing to pay current market prices, which are probably actually closer to the true cost of flying.
     
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