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STRATEGY

Avoid Getting Nickeled and Dimed to Death
 

Airfare wars have given rise to increased non-fare related fees.
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The precipitous drop in business airfares is a well-known fact. The entrance of low-fare competitors and the Internet's role in publishing what were more or less hidden fare price differentials are two of the key drivers in the business airfare declines. Not surprisingly, in reaction airlines have increased the amount and type of non-fare fees. Lately, the business travel press has been buzzing about Northwest and American airlines' decision to encourage consumers to purchase tickets on the Web. The tactic of choice is charging $5 if you buy a ticket from them over the phone and $10 if you buy a ticket at the airport.

Business travelers are outraged! Given that these fees are not a significant cost of the total ticket price and significantly less than the recent drop in business travel ticket prices, this reaction is more emotional than practical. Perhaps it is a long history of highly opportunistic pricing on the part of airlines that gets business travelers in a knot.

In the standard practice of using the press as chessboard, Northwest had announced a week or so ago that it would also charge travel agents and websites that use computerized reservation systems a pass-along charge also. Since American didn't announce a similar step, Northwest has dropped the charge. Their next moves were to match each other in announcing that the most elite frequent flyers would not be charged the fee. As usual, airline public price setting is great fodder for economics professors teaching the game theory of oligopolies, a concept best understood through the schizophrenics of its originator, John Nash, and our very own domestic airline industry.

Surprisingly, fees for changing or canceling your ticket, flying standby, and for excess or oversized baggage, which can be significant percentage of your ticket prices, are for the most part ignored or at least cause little outrage.

Cancellation/Change Fees

Airlines charge a change fee if you want to change your restricted-fare itinerary. These change fees are in addition to any difference between the cost of the original ticket and the cost of the new fare. Change fees can be as low as zero or as high as $100, as shown in the following table:

Airline Change Fee
AirTran $50
Alaska $50
America West $100
American Airlines $100
ATA $50
Continental $100
Delta $100
Frontier Airlines $100
Horizon Air $50
JetBlue Airways $25
Midwest Airlines $100
Northwest $100
Song $25
Southwest $0
Spirit $75
United $100
US Airways $100

Same-Day Standby

Because most airlines allow you to fly standby at no additional cost, the advantage of flying standby instead of changing your reservation is that if you have purchased a restricted fare, you can avoid the change fee -- and any applicable fare increase. However, there are exceptions. Delta charges a $25 fee to fly standby, but you get a confirmed seat. (And, yes, a confirmed standby seat is an oxymoron.) US Airways requires you to purchase a $25 standby coupon, whereas Southwest Airlines requires you to upgrade to the unrestricted fare.

Excess or oversized Baggage Fees

Every airline has a free baggage allowance, which is the maximum number and size of bags you can carry on or check in without additional charge. Depending on the airline, the free baggage allowance permits 2-3 checked bags that weigh less than 70 pounds each and do not exceed 62 linear inches. Continental, Delta, Northwest, and United charge for bags weighing greater than 50 pounds.

Excess and oversized baggage fees are charged if you exceed the free baggage allowance. These fees run anywhere from $40-$80 for the first additional bag. Although, most airlines will allow you to take one sporting goods item, such as skis or golf clubs, for no additional fee.

The airlines with the most generous baggage allowances and lowest excess baggage fees are AirTran, JetBlue, and Southwest, all of which allow three checked bags for free, with a $40-$50 excess bag charge. The most restrictive and costly airlines are America West, American, Continental, United, and US Airways, all of which allow just two checked bags and charge at least $80 for each additional bag. For example, if you intend to check four bags on Southwest you'll pay $40; on United, $160.

The following table details the airlines' excess and oversized baggage fees:

Airline Excess and Oversized Charges
AirTran $50 per item
Alaska $50 per item; overweight baggage fees are $25 per piece for baggage weighing 51-70 pounds and $50 for baggage weighing 71-100 pounds
America West $80 per item
American Excess item fees are $80 for the first three items, $105 for items 4-6, and $180 for 7-plus items; overweight baggage fees are $25 per piece for baggage weighing 51-70 pounds and $50 for baggage weighing 71-100 pounds
American Trans Air $50 per item
Continental Excess item fees are $80 per piece; oversize fees are $80 per piece; overweight baggage fees are $25 per piece for baggage weighing 50-70 pounds and $50 per piece for baggage weighing 70-100 pounds; if you are a OnePass Elite member or are flying first or business class, you can have either more or bigger bags without fees (or with reduced fees); call Continental for specifics.
Delta Air Lines Excess item fees are $40 for the first item, $80 per piece for items 2-3, and so on up to $180 for items 7-plus; oversize fees are $80 per item; overweight baggage fees are $25 per piece for baggage weighing 51-70 pounds and $80 per piece for baggage weighing 71-100 pounds.
Frontier Airlines $50 per item
Horizon Air $50 per item
JetBlue Airways $50 per item
Midwest Airlines $50 per item
Northwest Oversize fees are $25 per piece for baggage weighing 51-70 pounds and $50 per piece for baggage weighing 71-100 pounds.
Southwest Excess item fees are $40 per piece for items 1-2, $60 per piece for items 3-6, and $110 per piece for 7-plus items; oversize fees range from $40-$75 per item.
Spirit $50 per item
United $80 per item
US Airways $80 per piece for items 1-3, $105 per piece for items 4-6, $180 per piece for 7-plus items

This content is extracted from the Business Travel Almanac (ISBN 0-7897-2934-2, $19.99 USD, Que Publishing) with permission from Pearson Education.


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Last updated: Oct 1, 2004




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