Charges for luggage made up half of the company's profits last year as the top U.S. airlines took in $3.4 billion
POSTED: 1:30 a.m. HST, Jun 14, 2011
Travelers might feel as if they are being nickel-and-dimed with annoying baggage fees, but for Hawaiian Airlines and other U.S. carriers, those fees generated from checked luggage are adding up to big bucks.
Hawaiian, the state's largest airline, raked in $54 million last year from checked-bag fees, or roughly half of its $110 million profit.
The nation's 20 top airlines collected $3.4 billion in baggage fees last year, which helped them post a combined $2.6 billion in profits, according to data Monday from the U.S. Department of Transportation's Bureau of Transportation Statistics.
In addition to bag fees, Hawaiian took in $18.2 million from reservation cancellation and change fees in 2010. As a whole, U.S. carriers received $2.3 billion from reservation change fees last year.
"These fees have become the difference between profit and loss in our industry, and Hawaiian is no exception," Hawaiian spokesman Keoni Wagner said.
Income from baggage fees — which was up 24 percent from the previous year — helped U.S. carriers reverse three years of losses.
Hawaiian's baggage fees were up 41.4 percent last year, from $38.2 million in 2009, as the airline added flights and brought in larger planes.
What is proving profitable for the airlines has left travelers feeling peeved.
"It's a major inconvenience," said Forest Sexton, who arrived in Honolulu Friday from Portland, Ore., with his daughter Madison.
Sexton checked in one bag for $20 with Alaska Airlines for his daughter, who is transferring to the University of Hawaii.
The typical fee for most airlines is $50 round trip for the first checked bag and $70 for the second.
Hawaiian charges the same for mainland flights but lowers the round-trip fee on interisland flights to $20 for the first checked bag and $34 for the second bag.
Debbie Kiraly, who flew in Friday with her daughter Stephanie from Oakland, Calif., on Hawaiian, said they each checked two bags. The total damage was $120 one way.
"We were very unhappy," Kiraly said. "We already spent a fortune on the flight."
She said since her daughter is also transferring to UH, they had to pack a lot of things that could be used in her apartment.
"Normally we try to do carry-ons so we don't have to pay those fees."
Lance Agen, who returned Sunday from Seattle on Hawaiian after stopping off first at Disneyland, said he doesn't blame the airlines for the fees.
"It's an exorbitant amount … but I don't mind it, at least at the current price," he said. "We brought extra bags to shop at Disneyland and mainland stores we don't have here — Ikea, Trader Joe's. You know, local style means you have to bring back a lot of omiyage for family, friends and co-workers. … Paying baggage fees is probably still cheaper and more convenient than mailing them."
Hawaiian ranked 12th out of 20 U.S. airlines in 2010 for baggage fees and 10th for reservation cancellation and change fees.
The combined baggage and cancellation change fees represented 5.5 percent of the company's revenue of $1.31 billion last year.
Rick Seaney, CEO of FareCompare.com, said with oil prices hovering around $100 a barrel, airlines are depending on baggage fees to stay afloat.
"They were instituted during the fuel crisis of 2008, and they're not going away," he said.
Still, he said customers are growing increasingly perturbed.
"We didn't have checked bag fees historically, so when the airlines start piling those on, it looks like they're nickel-and-diming," Seaney said. "Unfortunately for the airlines, when they try to roll in some of those fees into the ticket prices, people stop buying tickets."
Patrick McFeeley, owner of Hawaii Quality Prints at the Kona Inn Shopping Center, said baggage fees have drastically changed the buying habits of customers, who already are forking out money for airfare, hotels, car rentals, food and activities. Now they are thinking twice about gift items because of extra baggage fees that might result from the purchases.
Retailers, he said, are suffering because of it.
"Before baggage fees, people would look at a product and say, ‘I'll take it with me.' Now when they pick up something that has weight or bulk, the first thing they think is, ‘Am I going to have to pay for extra baggage, and how much more is it going to cost to take it back?'"
McFeeley, who sells original artwork, said tourists often will forgo retailers who sell such gift items as curios, seashells, Hawaiian masks, turtle carvings, wooden bowls, jams, jellies and pineapples and instead opt for T-shirts because they are easy to pack.
But McFeeley has a solution.
"If the airlines would give those people who come to Hawaii one free bag as good will to take home, that would help the retailers," McFeeley said. "That would encourage them to spend more money on the island. Then you'd have people walking around trying to figure out how to fill up a bag and not how to empty a bag."