This is a story about airlines, profit centers, and how the government can create opportunity by failing to act.

Because when you think of an airline, you probably think of a company that makes money flying people from point A to point B. But a lot of very smart people think that's not really the key business. 

For example, one intriguing analyst thinks airlines are mainly in the business of selling frequent flyer miles to banks, which then resell them as credit card bonuses. 

That's kind of genius. But here's another brand-new analysis, this one from the U.S. Department of Transportation

It zeroes in on a key revenue source that passengers don't think much about: how U.S. airlines, chief among them American, United, and Delta, have collected more than $1 billion per quarter in checked and carryon baggage fees--during all 10 of the past 10 quarters. And $1.3 billion in the third quarter of 2018.

This comes on top of the $2.9 billion a year that they make in change fees, which they charge when you need to cancel or change a reservation. 

American Airlines took in the most in baggage fees, according to this federal data: $309 million, followed by United and Delta. (On a revenue per passenger basis, Spirit and Frontier actually made more.)

Sometimes, of course, these kinds of fees wind up being levied on unsuspecting passengers at the last minute -- either because they realize they need to change a flight, or that they have to check a bag that they hadn't planned on checking. 

But the most savvy travelers, who know all about these fees and plan for them, might be a little bit amused at all of this news. 

They shouldn't be.

Because this is a big deal to the airlines. So much so that that they made fee regulation the number one, must-kill thing that they wanted to stop in the massive, sweeping aviation bill that Congress passed and President Trump signed a few months ago.

"It is our top priority," airline lobbyist Sharon Pinkerton said at the time, talking about the change fee issue, "to ensure that this--what we consider an existential threat to our business--does not become law."

News flash: They succeeded. A week before Congress had to take up the Federal Aviation Administration bill -- otherwise, the FAA technically would not have had authorization to do anything -- a proposal to regulate these kinds of fees was stripped from the law.

Nice work on their part. You almost have to respect that kind of effectiveness.

The funny thing is that these kinds of fees aren't really for anything. And passengers don't like them.

By which I mean, the ability to make changes or to bring bags aboard a plane are privileges that airlines either bundle into the price of a ticket--the way Southwest Airlines largely does things--or make "à la carte," so to speak, the way most other big airlines do it.

It all depends on how you want to treat your customers -- and what you think your business really is.

Published on: Dec 17, 2018
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