Now that oil prices are half of what they were in July, will airlines begin dropping the fees for food service and baggage they have tacked on in recent monthsâ¢
Rick Seaney dissolved into laughter.
"We could all wish for that, but it's very difficult for airlines to unring that bell," said Seaney, CEO of FareCompare.com, a Web site that aggregates airline ticket search engines and offers travel advice and planning tools. "This is something that airlines wanted to do even before the oil crisis hit."
In mid-July, crude oil peaked at $147-per-barrel, pushing jet fuel to $4.34 per gallon, and prompting most major U.S. airlines to begin imposing extra charges for previously free services.
Want to book a reservation by phone⢠$15-25. Check a bag⢠Another $15-25. A second bag⢠At least another $25. Savor one of those famous airline meals⢠$3 to $10, please. Most airlines also raised fees to change already-booked tickets increased by 50 percent, to $150.
Exceptions include low-fare Southwest Airlines, which only charges $25 if three or more bags are checked. Among pre-deregulation "legacy" carriers, Delta Air Lines still is not charging for the first checked bag, although the second will run you $50. Continental is not charging for meals on flights longer than two hours.
Oil closed up $5.18 to $67.50 in trading Wednesday, and jet fuel traded this week at $2.10 per gallon in New York Harbor spot markets. But airlines are still grappling with costs that are far above levels that allow the industry to operate profitably, industry advocates say.
"Fuel used to be 10 to 15 percent of an operating costs, below the level of labor," said David Castelveter, spokesman for the Air Transport Association, which represents airlines. "Now it's far higher, about 40 percent of operating costs.
"The industry is on track to lose between $3 billion and $5 billion this year," he added. "What business model says you should roll back fees when you have a multibillion dollar loss?"
While several international carriers, including Air France, KLM and British Airways have reduced or eliminated fuel surcharges, U.S. carriers have only reduced surcharges on cargo.
Sen. Robert Menendez (D-N.J.), last week sent a letter to airline executives saying it would be better to raise air fares on the front end, rather than tack fees onto the back end of the flights.
"If the airline industry needs money, then they should be honest and say what the price of the ticket should be," Menendez told the Tribune-Review yesterday. "If the airlines don't respond, we will look at our legislative options in the new session in January."
The presence of such Web sites as FareCompare, Travelocity, Orbitz and others that list air fares from cheapest to most expensive are making airlines particularly conscious about base fares, said Charlie Leocha publisher of Tripso.com, a 10-year-old Web site of travel news and commentary.
"The airlines should raise their fares," Leocha said. "But they're are loath to do so because it will drop them down in their rankings. They need to keep the fare low so they'll show up near the top."
"The fees are here to stay," he added.
