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Transportation Nation

Feds: Airlines Collect $1.4 Billion in Baggage and Reservation Change Fees

Thursday, May 17, 2012

As part of their fourth-quarter revenue,  airlines collected $792 million in baggage fees and $567 million in reservation change fees from October to December 2011.  That's down slightly from the third quarter, though it's still a big number.

Overall, airline profits in the fourth quarter of 2011 are down from the fourth quarter of 2010, with a 1.5 percent profit margin compared to 3.2 percent a year earlier, the federal Bureau of Transportation Statistics reported today.

The BTS notes that  "other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately."

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Transportation Nation

Airlines Collected Almost $900 Million in Baggage Fees and $600 Million in Reservation Change Fees in Third Quarter 2011

Tuesday, March 13, 2012

Some interesting nuggets in the Bureau of Transportation Statistics third quarter 2011 airline report:  those pesky baggage fees and reservation fees?  They contributed a total of $1.5 billion to airline revenue between July and September of 2011, alone.

Airlines collected another $872 million from frequent flyer award sales and pet transportation fees.   The press release notes:

"Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately."

Here's the full release:

Scheduled passenger airlines reported a profit margin of 6.8 percent in the third quarter of 2011, down from the 10.4 percent profit margin in the third quarter of 2010, BTS reported today in a release of preliminary data. 

BTS, a part of the Research and Innovative Technology Administration, reported that the network airlines reported an operating profit margin of 7.1 percent as a group in the July-to-September 2011 period. The low-cost group's profit margin was 6.0 percent, and the regional group’s was 2.5 percent. See Airline Financial Data Press Releases for historic data.

As part of their third-quarter revenue, the airlines collected $898 million in baggage fees and $603 million from reservation change fees from July to September 2011.

In addition to baggage and reservation change fees, airlines reported ancillary revenue of $872 million from passengers and from other sources. This revenue category includes revenue from frequent flyer award program mileage sales and pet transportation fees. Total third quarter 2011 airline revenue from all ancillary sources that can be identified, including fees and frequent flyer sales was $2.381 billion, with Delta Air Lines reporting the most, $814 million.  

Baggage fees and reservation change fees are the only ancillary fees paid by passengers that are reported to BTS as separate items. Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately.

The baggage and reservation change fees from passengers combined with ancillary revenue from other sources constituted 5.8 percent of the total revenue of the 27 carriers that reported receiving ancillary revenue. Spirit Airlines reported the largest percent of operating revenue from ancillary revenue of any carrier, 31.1 percent. For additional Miscellaneous Operating Revenue data, go to BTS Schedule P-1.2.           

            See BTS Airline Financials Release for summary tables and additional data.

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Transportation Nation

DOT Forces Airlines to Disclose Fees, Add Other Passenger Protections

Wednesday, April 20, 2011

(Alex Goldmark, Transportation Nation) The U.S. Department of Transportation announced tougher rules designed to protect airline passengers today. The new requirements deal with baggage fees, tarmac wait times and compensation for travelers bumped from flights.

Most of the rule changes announced have to do with fees and costs to passengers. Transportation Secretary Ray LaHood said airlines will be required to reimburse passengers for baggage fees if a bag is lost, though not if it is late."People get so upset and mad that their bag didn't make it, and then they find out that they're not even going to be reimbursed? It's ridiculous," LaHood told NPR.

Airlines will also be required to "prominently disclose all potential fees" on their websites. That includes baggage fees, but also meal costs, seat upgrade fees as well as government taxes and surcharges. Currently government fees aren't required to be included in the posted price of an airline ticket. Additionally, the compensation for passengers who are involuntarily bumped from flights is being doubled.

“Airline passengers have a right to be treated fairly,” said Secretary LaHood in a statement. “It’s just common sense that if an airline loses your bag or you get bumped from a flight because it was oversold, you should be reimbursed.

LaHood also told NPR the DOT was enshrining these policies in regulation because the industry was not doing it on their own. "Competition has not taken care of these problems. We would not be addressing them if competition had done that," LaHood said.

Another new rule annouced today expands the ban on legnthy tarmac delays. Airlines can be fined as much as $27,500 per passenger if a plane stays on the tarmac more than four hours. That 2009 rule nearly eliminated the dreaded experience of being stranded for hours trapped in a grounded plane. From May 2009 to February 2010 that happened 664 times, a year later, after the rule took effect, during the same period there were just 16 incidents.

Right now, only domestic airlines are required comply, but the new rule extends the fines to international carriers as well. The DOT says it is taking this action, in part, because of an incident at New York's JFK airport during a blizzard last winter when an international carrier held passengers for 11 hours.

Carriers must also provide water and access to working bathrooms after two hours.

Listen to the NPR report here. See the full announcement at the DOT website.

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Transportation Nation

TN Moving Stories: China's (Less) High-Speed Rail, Sleeping Controllers, Carsharing Meets Stock Market

Thursday, April 14, 2011

If you're wondering how all these contentious budget deals are affecting plans -- and money -- for high-speed rail, Transportation Nation's Andrea Bernstein combed through the reports to find out. (The Takeaway)

China is also putting the brakes on high-speed, but for another reason. China slows down its bullet train over safety concerns. (WSJ)

After a second air traffic controller fell asleep working the lonely night shift, the FAA has announced it will add a second controller overnights at 26 airports, including D.C.'s Reagan National. (WAMU) But are air traffic controllers just plain overworked? (The Takeaway)

ZipCar, the country's largest carsharing company, has gone public, raising more than 31 percent above the expected offering price. (Bloomberg) That's all without the company actually making a profit. Marketplace explains that's not because the model doesn't work, but because buying all those cars to expand to new cities keeps the company in the red.

If it still ruffles your feathers to pay to check a bag while flying, consider that you don't get a refund on that fee when the airlines loose your luggage. Well the DOT wants to change that. (AP) Security pat-downs are also under review. After a You Tube video showed a six-year-old enduring a security pat-down, the TSA is considering changes to the policy. (Denver Post)

IBM and U.C. Berkeley are teaming up, and using smart phones, to tackle traffic jams. (Wired)

If freight trucking is an economic indicator, this isn't the best news. Road freight shipments fell 1.5 percent in February. (TruckingInfo)

(Photo: Asian Development Bank)

The city of Mandaluyong in the Philippines just launched a plan to use electric tricycles as public transportation. It's part of a wider effort to reduce air pollution. (TheCityFix)

The Texas Rangers are suing a former team owner for planning to price gouge fans for parking at the ballpark this season. (Dallas Morning News)

Like many transit systems facing budget cutbacks, D.C. area Metro is considering cutting bus routes, increasing weekend wait times, and eliminating subsidies. It is not considering fare hikes... now. (WAMU)

Maryland has voted down a gas tax increase. They did, however, raised taxes on alcohol. But, the booze surcharge won't go to transportation projects. (WAMU)

And on NYC bike lane usage, Streetsblog takes the same data as the NY Post, but draws the opposite conclusions. People use the bike lanes a lot, they find. (Streetsblog)

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Transportation Nation

Airlines Face Pressure to Disclose Fees

Thursday, July 15, 2010

(Washington, DC - Todd Zwillich)  Do you know exactly how much an airplane ticket is costing you?

The answer for millions of travelers is, ‘probably not,’ at least not until the last minute, when it’s time to break out the credit card. Now, struggling airlines are facing scrutiny from Congress and the Obama Administration over the fees they charge passengers, for everything from extra bags to window seats.

The Government Accountability Office told lawmakers Wednesday that airlines had cleared nearly $8 billion in passenger fees in 2008 and 2009. Fees for cancellations, reservations and checked baggage alone reached $1.3 billion in the first three months of this year, up 13% from the same period last year, GAO said.

Of course, the Obama Administration already knew that.  The Department of Transportation is busy drafting new regulations forcing airlines to more clearly disclose their extra fees—for soft drinks, “fuel surcharges”, “convenience fees”, etc.--and also limit some of the charges that airlines can slap on customers.

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