Hawaiian bags $17.8m to keep it in the black

Hawaiian Airlines differentiates itself among U.S.-based carriers by offering free meals in coach class.

But when it comes to baggage fees, the largest air carrier in Hawaii is just as dependent upon them as other airlines.

Hawaiian averted a third straight quarterly earnings loss by collecting $17.8 million in baggage fees during the April-to-June period, according to data released Monday by the U.S. Department of Transportation. The fees helped Hawaiian make a previously reported $11.3 million in profit.

Meanwhile, Island Air’s $851,000 in baggage fees helped it narrow its quarterly loss to $1.8 million.

In an industry that has increasingly turned to a la carte pricing, Hawaiian spokes­woman Ann Botticelli said baggage fees are necessary to remain profitable.

"The trigger for choosing one airline over another is the price of the ticket," Botticelli said in an email. "As low-cost and ultra-low-cost carriers enter the market with completely unbundled products that offer steeply discounted fares that are offset by separate charges for everything from reserved seating to meal choices, and as consumers purchase based on the discounted fares, ancillary collections like this are needed to maintain profitability and stability."

Hawaiian also collected $4.3 million in the second quarter from reservation cancellation and change fees, while Island Air brought in $122,500 from such fees.

Mesa Air Group Inc., which operates the second-largest airline in Hawaii with go!, doesn’t break out separate data for the interisland carrier.

Overall, the nation’s 16 reporting carriers collected $871.1 million in baggage fees last quarter and $719.2 million in reservation cancellation and change fees.

Colorado-based airline consultant Mike Boyd said it wouldn’t surprise him if baggage fees keep climbing higher.

"They could," he said. "Bag fees were originally 15 bucks; now they’re $25 and $35. Airlines will increase them if passengers will pay for it. Why leave money on the table?"

Boyd said, though, he doesn’t blame the airlines for charging passengers.

"I’ve come to the belief that it’s only fair," Boyd said. "If you’re going to have the airline handle a piece of luggage, which takes a lot of electronic equipment and a lot of labor, you should pay for it. I don’t pay for it because I don’t check luggage."

Hawaiian charges $17 each for its first and second checked bags on interisland flights and $25 and $35, respectively, for checked bags on North America flights. There is no charge on international flights.

Island Air charges $15 for the first checked bag and $30 for the second checked bag.

Airlines have relied heavily on baggage fees and other ancillary revenue to help offset their expenses since fuel prices began to spike. They began charging for checked bags in 2008.

There is, though, such a thing as a free lunch.

Botticelli said there are no plans to eliminate Hawaiian’s free meal service.

"Most of our guests are leisure travelers and many are families who are spending a large portion of their disposable income for the year on a vacation to Hawaii," she said. "We want our guests to feel that their Hawaiian vacation began the moment they boarded our flight, and the hospitality of providing food and drink is a big part of that experience. It is an additional cost to bear, but at this time there is no discussion of eliminating it."