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The Honolulu Advertiser
Posted on: Friday, June 13, 2008

United to charge $15 fee for first bag

Advertiser News Services

Baggage fees are fast becoming an unavoidable part of U.S. flying — the largest two carriers now charge $15 for a first checked bag.

No. 2 United Airlines announced its new fee yesterday, three weeks after No. 1 American Airlines set the precedent for the charge.

And joining United and American with its own new fee charges yesterday was US Airways, the No. 7 carrier.

Most U.S. airlines already have instituted a $25 charge for checking a second bag — part of a potpourri of new fees that reflect a struggling airline industry passing along record fuel prices to passengers in the form of higher fares, fuel surcharges and service charges.

UAL Corp.'s United said its baggage fee goes into effect for customers who buy tickets beginning today for domestic flights on Aug. 18 or later.

"With record-breaking fuel prices, we must pursue new revenue opportunities while continuing to offer competitive fares by tailoring our products and services around what our customers value most and are willing to pay for," said John Tague, United's chief operating officer.

As of July 1, Southwest Airlines will be the only U.S. carrier that permits two checked bags for free, according to air travel expert Tom Parsons, who expects still more service fees to come.

"The major airlines are truly a la carte now — you don't get anything free any more," said Parsons, chief executive of the travel Web site Bestfares.com. "You get a tin can in the air, and anything else you pay as you go."

He expects the legacy carriers to follow the lead of discount carrier Spirit Airlines, which now charges extra for seat reservations — $5 for middle seats, $10 for window and aisle seats and $15 for exit-row seats. Other airlines also have begun charging for window or aisle seats.

The fees amount to "grasping at straws," said consultant Robert Mann of R.W. Mann & Co. in Port Washington, N.Y. "The industry needs to raise fares by 20 percent, but it can't raise fares on people who have already bought tickets."

United said its new baggage fee policy does not apply to customers flying in first or business class or those who have premier status with United or Star Alliance. It also said first and second bags will still be free for itineraries that include international flights, aside from Canada.

The Chicago-based carrier also is increasing the fee to check three or more bags, overweight bags or items that require special handling to $125 from $100, or to $250 from $200, depending on the item.

United estimates the potential revenue from baggage handling service fees at about $275 million a year. It expects the new $15 service fee to apply to one in every three customers.

US AIRWAYS ADDS FEE

US Airways' new fee for a first checked bag begins with tickets booked on or after July 9.

It said its new passenger fees, combined with previously announced charges for a second bag and choice seats, will help raise $300 million to $400 million annually.

The Tempe, Ariz.-based carrier also said it will cut domestic flights, shrink the size of its fleet, and slash 1,700 jobs. And the free drinks in coach are on their way out — passengers in the back will be charged $2 per nonalcoholic drink starting Aug. 1.

"We must write a new playbook for running a profitable airline in this new and challenging environment," US Airways chairman and chief executive Doug Parker said in a statement.

Also, US Airways plans to cut its Las Vegas operation by almost half by the end of the year, rolling back daily flights to 74 from a high of 141 flights in 2007.

FUEL SURCHARGES

Separately, the steady rise of fuel surcharges continued, with United, Continental Airlines Inc., Delta Air Lines Inc., US Airways Group Inc. and Northwest Airlines Corp. all matching the $20 increase in fuel surcharges initiated by American on most of its domestic routes Wednesday.

United and other airlines have been struggling with a crushing rise in fuel prices. United's fuel bill was $6 billion in 2007 and is expected to jump to $9.5 billion this year, CEO Glenn Stilton said.

And Delta Air Lines Inc. plans to merge with Northwest Airlines Corp., a major United rival on flights across the Pacific.

UAL shares tumbled 91 cents, or 12.6 percent, to $6.31 in yesterday's trading after crude oil prices reversed course and finished higher.

US Airways shares sank 51 cents, or 15.9 percent, to $2.69 after dropping as low as $2.39 — their lowest level in the company's three years out of bankruptcy.

The Associated Press and Bloomberg News Service contributed to this report.