comscore Baggage fees net $76M for Hawaiian | Honolulu Star-Advertiser

Baggage fees net $76M for Hawaiian

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    Travelers wait in line for customer service at the Hawaiian Airlines Departures section of Honolulu International Airport in Honolulu on Thursday August 7

Hawaiian Airlines made more money in baggage fees in 2014 than it did in overall earnings.

In what has become a sign of the times, the state’s largest carrier parlayed checked, overweight and oversized bags into a company-record $76.1 million in fees last year to exceed the $68.9 million it made in net income.

Last year’s haul exceeds the $70 million that Hawaiian earned in baggage fees in 2013 when the airline had a profit of $51.9 million.

Even though jet fuel prices have dropped dramatically since spiking a couple years ago, Hawaiian and other carriers have not backed down and now rely heavily on baggage revenue.

"Baggage fees are now part of the income," Colo­rado-based airline consultant Mike Boyd said Monday after the release of U.S. Department of Transportation data. "Clearly, Hawaiian knows how to manage their business. It’s critically important, and it’s very, very clear that Hawaiian understands that and is managing that properly."

In 2008, American Airlines became the first U.S. carrier to begin charging for checked bags because of the escalating price of oil. Jet fuel prices have come down over the last year, though, and Hawaiian’s fuel expenses dropped 13.2 percent in 2014 over 2013 and in the first quarter of this year were down 34.9 percent over the same period a year ago.

Baggage fees are hardly the only source of ancillary income for Hawaiian. The carrier generated $20.1 million in reservation cancellation and change fees in 2014 to bring its total haul, including baggage fees, to $96.2 million.

On top of that, Hawaiian also collects revenue from its value-added products, such as its Extra Comfort seats and sales of HawaiianMiles products associated with its co-branded credit card. Airlines are not required to break out to the U.S. DOT the income they earn from their value-added products. Last month Hawaiian said that first-quarter sales of its value-added products averaged out to $21.32 per passenger, an increase of 28 percent from the year-earlier period.

Hawaiian, which carried a company record 10.2 million passengers last year, charges $25 for the first checked bag and $35 for a second checked bag for mainland and interisland flights — with HawaiianMiles members paying $15 and $20, respectively, for interisland flights.

For the fourth quarter, Hawaiian’s baggage fees were $18.9 million, up 14.1 percent from $16.6 million in the year-earlier period. Hawaiian’s cancellation/change fees rose 13.7 percent to $5 million from $4.4 million.

Island Air, meanwhile, received $4 million from baggage fees in 2014 compared with $3.2 million in 2013. For the fourth quarter, Island Air’s baggage fees totaled $935,000, up 11.3 percent from $840,000 in the year-ago period.

The airline charges $15 for the first checked bag and $25 for the second.

Island Air’s cancellation/change fees rose 25 percent to $600,000 from $480,000 for the year, while they were virtually flat in the fourth quarter at $121,000 versus $122,000 in the final three months of 2013.

Overall, the 15 reporting U.S. airlines made $3.53 billion from baggage fees in 2014, up 5.4 percent from $3.35 billion in 2013. They also collected $2.95 billion in fees for reservation cancellations and flight changes last year, up 4.8 percent from $2.81 billion in 2013.


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