Airline baggage fees: revenue fail

Spoken | August 9, 2016

Suitcases HeidiBlog HS by Heidi Miller, Social Media Manager

Everyone hates airline baggage fees, right?

So why do some airlines insist on charging them? Theoretically, it’s to make up for flagging revenues. However, leave it to the insightful Jackie Huba to dispel that myth. Amongst reports that airlines have collected hundreds of millions of dollars in baggage fees and that these new fees are a goldmine for carriers, boasting $670 million dollars in the second quarter alone for U.S. carriers, Jackie Huba points out the obvious: everyone hates them. And they hate the airlines that charge them.

What’s more, she backs her finding up with facts. In her recent post, Fees are penalties, always, she cites figures for actual miles that passengers are traveling on certain airlines. Southwest and JetBlue reported substantial increases in passenger miles (8.8% and 9.8% respectively), while Delta, American, US Airways and United all reported decreasing passenger miles.

What’s the difference? JetBlue and Southwest don’t charge for bags. The others do. As a result, JetBlue and Southwest get more customers flying more miles because they provide a better customer experience. And the others brag about revenue from checked bags, all while their customers fly fewer miles or simply take their business elsewhere. Wonder how those baggage fee revenues will look when all the customers have switched to Southwest, JetBlue or just decided to take the train?

And in an age where customer service trumps price for consumer choices and retail stock prices reflect customer satisfaction levels, that simply won’t fly.

Cross-posted to Talk it up! blog

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