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Carry-ons to stay free, five airlines promise

Mon., April 19, 2010

ATLANTA – In a remarkable gesture to fee-weary air travelers, five major U.S. airlines committed Sunday to not charge a fee for carry-on bags.

The promise to New York Sen. Charles Schumer from American Airlines, Delta Air Lines, United Airlines, US Airways and JetBlue Airways comes despite the fact that some of those same airlines are expected to report first-quarter losses this week amid significantly higher fuel prices and the beating they took from the heavy February snowstorms.

Ancillary fees for air travel – including baggage fees, reservation change fees and other miscellaneous operating revenue – have been piling up.

For U.S. carriers they totaled $1.95 billion in the third quarter of 2009, roughly 36 percent higher than for the same period a year earlier. For 26 large U.S. airlines, those fees made up 6.9 percent of their total operating revenue in the third quarter of last year, according to the most recent government data available.

But major carriers risk alienating customers if they follow Spirit Airlines’ lead and impose a fee on carry-on bags. The small Florida airline in August will begin charging customers up to $45 to place a bag in an overhead bin.

Other fees haven’t stopped people from flying, but many of those fees can be avoided. It would be hard for many travelers to avoid a carry-on bag fee.

“We believe it is something that’s important to our customers and they value, and we will continue making that available to them at no charge,” American Airlines spokesman Roger Frizzell said.

Schumer said Sunday that American, Delta, United, US Airways and JetBlue each have committed to him that they would not institute fees for carry-on bags. He said he was hopeful other carriers would follow suit.

Notably absent from the list was Continental Airlines, which is said to be in merger talks with United.

It wasn’t clear how long the five airlines had pledged not to charge for carry-ons. Frizzell couldn’t say, and a spokesman for Delta declined to comment.

Schumer and five other Democratic senators – New Hampshire’s Jeanne Shaheen, Maryland’s Ben Cardin, Minnesota’s Amy Klobuchar, and New Jersey’s Robert Menendez and Frank Lautenberg – support legislation that would tax airlines if they charge carry-on bag fees.

Schumer said the legislation will move forward until it becomes clear that no airline will institute the charges. He will have an uphill battle changing the minds of Spirit executives when he meets with them soon.

Spirit CEO Ben Baldanza told the Associated Press on Sunday that his airline is moving ahead with its carry-on bag fee.

“Our plan was never predicated on anyone matching us,” Baldanza said. “The fact that other people are saying they won’t has never changed our view that this is right.”

He said his competitors’ decision actually puts pressure on those airlines because Spirit has lowered its fares more than the price of the new fee.

“We knew we took a risk with this strategy, but we believe on balance it’s one that our customers will buy into,” Baldanza said.

Analysts expect several major carriers to get back in the black in the current quarter – the second quarter – and in the second half of the year, thanks to the summer and holiday travel rushes. They wouldn’t want anything like an uproar over carry-on bag fees to keep passengers from flying.

Even so, for the financial improvement airlines have seen to be sustainable, revenue needs to keep rising – either through higher fares, more fees or both – and airlines need to better position themselves in case fuel prices spike even higher.

On the last day of the first quarter – March 31 – the price of a barrel of oil closed at $83.76, more than 68 percent higher than on the same day a year earlier.

That means if major carriers don’t charge for carry-ons, they could increase existing fees or institute new fees altogether.

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