United Airlines passengers learned about a brand new policy Friday, and literally nobody is going to like United Airlines more because of it. 

It goes to a fundamental debate in the airline industry. And you'd be forgiven for wondering if that's why they decided to announce it on the Friday before the long Labor Day weekend.

Here's the context, the policy, and the difficult question United Airlines passengers will now be asking.

'The past eight years'

On Friday, United announced it's increasing its economy checked baggage fee for flights to from North America, the Caribbean and Central America.

This is notable because it comes right on the heels of similar announcements by the much smaller JetBlue, and two Canadian airlines. Among the big four U.S. airlines however, United is the first to announce this kind of policy.

The fee increases work out as follows, as a United spokesperson explained to me Friday evening:

  • First checked bags will move to $30 in these markets.
  • Second checked bags within the U.S., Puerto Rico, Virgin Islands, Caribbean and Central America will move to $40.
  • Second bag on flights to/from Canada will be $50.
  • Second bag on flights to/from Mexico will not change.

These aren't mammoth changes, granted. They apply to all new flights booked after today, but for example, the $30 fee was only $25 before.

And as the same United spokesperson pointed out to me "most of [the fees] have not been changed for the past eight years," and passengers with MileagePlus Premier status or MileagePlus credit cards will be exempted.

So maybe they're assessing that while nobody will like this, few passengers will hate it so much they'll choose another airline. But there's only one problem with that thinking.

Every immediate dollar

United released this new fee information on the Friday before Labor Day. That's their right of course, and the Friday news dump is an old P.R. trick when you know that people won't like what you have to say. 

But Friday's news comes in the context of what happened last Monday, when an interview with United's president, Scott Kirby, was made public. And that interview suggested a possible shift at United in an ongoing debate in this industry--a shift to the other side of this debate.

In short, the debate is over whether it's better to:

  1. Squeeze every immediate dollar out of your customers?
  2. Or treat customers with respect and kindness, and bank on building your brand?

As passengers, you and I would prefer that airlines go with #2. But investors often reward #1. For example, after the new policy Friday, United's stock jumped to an all-time high.

And that's why people noticed when Kirby was said his top priority for the year would be "about changing our DNA and changing how people feel when they fly United."

He said he was hoping to get away from "just the hard metrics of, 'Did you get me there on time and what are the financial numbers?'" and instead focus on "changing how people feel."

It was literally five days ago. But now we're right back on the "financial numbers side of the equation.

Southwest's CEO promised lately that his airline  won't be looking at baggage fees any time soon. But as United makes this more of the norm, it's highly likely that the other two of the other Big 4 airlines, Delta and American, will follow suit.

Published on: Sep 1, 2018
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