The baggage fees paid to Hawaiian Airlines last year turned out to be the difference between a profit and loss for the state’s largest carrier.
Hawaiian generated a company-record $67.8 million in baggage fees that easily eclipsed the $53.2 million in net income it made for the year. Hawaiian also took in $18.3 million in reservation cancellation and change fees.
The combined $86.1 million in fees was part of an upward trend for U.S. airlines, which collected more than $6 billion in such fees in 2012, the highest-ever amount for the industry, according to data released Tuesday by the federal Bureau of Transportation Statistics. The 15 largest U.S. carriers took in $3.49 billion in baggage fees, up 3.8 percent from $3.36 billion in 2011. Reservation change fees rose 7.3 percent to $2.55 billion from $2.38 billion a year ago.
"Ancillary fees are important to the airline, and people will pay them," said Colorado-based airline consultant Mike Boyd. "Why leave money on the table?"
"Airlines can make the argument that most of the manpower at the airport is now handling luggage," Boyd said. "People board themselves. They don’t need a ticket counter anymore because there are no more tickets. So for those passengers who don’t want to incur the baggage expense, they shouldn’t check luggage."
Airlines, which are at the mercy of high fuel prices, have relied even more on baggage fees and other ancillary revenue to help offset their expenses since charging for the first checked bag in 2008. Airlines also collect fees from bags that are overweight or oversize.
Hawaiian’s baggage fees increased 19.9 percent last year from $56.6 million in 2011. Since 2008 Hawaiian’s baggage fees have risen from $11.6 million that year to $38.2 million in 2009 and $54 million in 2010.
"It’s primarily a function of our growth," said Hawaiian spokeswoman Ann Botticelli, adding that airlines have addressed consumer demand for lower fares by offering ancillary services on an a la carte basis.
Hawaiian charges $25 for the first checked bag and $35 for the second checked bag on domestic travel. For interisland routes, it charges $17 for the first checked bag and $25 for the second checked bag. Hawaiian does not charge for the first two checked bags on international flights. Based on the 9.48 million passengers that Hawaiian carried in 2012, it received $7.15 in baggage fees per passenger.
Delta Air Lines carried the most passengers of any U.S.-based carrier and took in the most fees at $865.9 million, an average of $7.44 per passenger.
Airlines have been creative in finding other ways to pick up additional revenue. Some now charge for extra legroom, seat selection, the ability to skip security lines and for premium meals. And earlier this month, no-frills Spirit Airlines replaced its toll-free customer help numbers with a toll-charge number with an 801 area code near Salt Lake City. For those customers who don’t have unlimited long-distance plans, the cost of a call to Spirit could run 5 to 18 cents a minute depending on the call plan.
"It’s like a porn line," Boyd said. "You pay by the minute when you call Spirit. Fees that airlines can dream up are beyond what us mere mortals can think of."
Patrick McFeeley, who owns a photography studio of the same name in Makawao, Maui, said baggage fees are hurting business because tourists don’t want to purchase heavy or large items.
"We’re 100 percent dependent on the airlines," he said. "Every (non-Maui) customer who comes through the doors come through the airlines first. As baggage fees go up, people are getting more fed up, and they’re taking out their vengeance on retailers with hard goods.
"Before, if they looked at something and liked it, they would pack it. Now they don’t want to be overweight, and they don’t want to pay for an extra bag and they don’t want to buy it. So for the retailers of goods, we’re on the edge. Businesses are losing one, two, three sales a day, and that’s about 60, 70, 80 sales a month. That’s thousands of dollars per business. That’s lost sales taxes and jobs going away because businesses are firing employees. That’s absolutely devastating."
McFeeley suggested that airlines offer a promotion whereby tourists are allowed to bring home one free bag.
"If the airlines run a promotion and give customers a voucher for one free bag when they return home, then people would go on a shopping spree and fill that bag," McFeeley said. "Tourists would feel great because they have a free bag to go shopping with, and retailers — especially the small retailers who are getting hurt the worst — would have a chance."
