New fees cause uncertainty in air travel

12 June 2008 23:37  [Source: ICIS news]

HOUSTON (ICIS news)--Whether or not additional fees for checking in luggage will have an affect on passenger travel is yet to be determined, but behaviour changes in passengers will result from those surcharges, an Air Transportation Association (ATA) executive said on Thursday.

“Passengers will have to pack lighter, not just for convenience, but for cost,” said ATA communications vice president David Castelvetter.

United Airlines, the latest US carrier to announce additional fees for checking in baggage, said on Thursday it will charge a $15 (€9.6) fee for checking in one bag for domestic travel.

"With record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares,” said John Tague, United Airlines chief operating officer.

Since last year, jet fuel costs have jumped 217% in over a year, according to the ATA.

The baggage surcharges are just the latest in a series of operational changes. Regardless of added costs, Castelvetter considers flying to be “still a bargain”.

“While fuel prices have doubled since last year, ticket price is down half of a percent.” Castelvetter claimed.

According to the ATA, the fuel bill for the commercial airlines was $16bn (€10.24bn) in 2000.

“We’re on pace to $61bn in fuel costs for 2008,” Castelvetter said.

How the new baggage surcharge policy will affect demand is yet to be seen, Castelvetter said.

“For a long time, we were in an age of bundled services that were part of the ticket,” Castelvetter said. “Now everything is unbundled, offered a la carte. The question to be seen is whether that unbundling will determine if someone won’t fly.”

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By: Steven McGinn
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