Fees Rise Due to Airline Earnings Stall
Posted by Heather Terry at 5:16 PM
0 comments - Categories: 2009 Newsletters | Air Travel

Travelers can expect higher fees and fuel surcharges while airlines are trying to offset their lost revenue due to lower fares, special promotions, and severance packages. Since the fall of the economy in late 2008, airline traffic has taken a steady fall with each passing month. Business travel, which used to be one of the most lucrative for airlines, has been hit especially hard. The high-fare business travelers are now being replaced on many planes with deal-seeking leisure fliers, leading to a decline in revenue for the airlines. As a result, airlines have been trying to cut costs by reducing their number of employees. Continental Airlines has plans to lay off another 1700 workers, on top of the 1200 jobs they have already cut. Southwest downsized 1400 employees with severance payouts of cash and travel benefits. According to the Bureau of Transportation, full time employment with commercial airlines fell by almost 7 percent in May of 2009 from the same month a year ago. Airlines have been allowed to show fuel surcharges, which rarely are related to reality of their costs, as a way to collect extra money without government intervention. In other words, there are two parts to the airfare. Part A is what they advertise, Part B is the fuel surcharge they charge at the time of ticketing. (This can change almost daily as they watch crude oil prices). They are as quick to raise the prices, but very slow to lower them when crude prices fall.
In addition to the fuel surcharge cash-in, the airlines are capitalizing by stripping their previous packaged services and charging a-la-carte for bags (second bags to Europe are now $50), meals, and that aisle or exit row seat. United Airlines has announced that they will be scaling back the capacity on international flights. This would reduce flights to match the lighter demand. United has also increased fees, along with Continental, Delta and US Airways. They are all now charging an extra $5 for checking bags at the airport instead of online. Continental has even begun charging an extra $5 for flight reservations taken over the phone.
These new baggage fees, along with the other fees for a-la-carte services, generate millions of dollars in revenue for the airlines, allowing them to continue running.
What Can You Do? Book early! Airlines offer the best rates, particularly for groups, when seats are first available. At Fellowship Travel, we can book 11 months in advance of your return date. Booking seats at this time can save or group hundreds to thousands of dollars. You can also ticket early. Typically, we ticket groups a couple months before the travel date. However, if you start to see fuel surcharges rise, we can ticket your group early and lock in the current price. Just go to www.fellowship.com to get your free quote today! 
