Would You Like Engines With Your Flight?

Cash-strapped airlines have rolled out a new set of fees.

BySCOTT MAYEROWITZ <br> ABC News Business Unit

April 4, 2007 &#151; -- Want to avoid that dreaded middle seat next time you fly?

Some airlines now allow customers to reserve certain aisle and exit-row seats, but that extra wiggle room will cost you. So might a bevy of traditional services that were once free, such as checking baggage or soda and coffee.

Buying an airline ticket used to be simple, if not wildly variable in price. Now consumers have more options -- and more fees -- when they fly, a trend that appears to be accelerating as airlines recover from industrywide losses. Call it airline ticketing à la carte.

"Airlines are definitely putting an emphasis now on providing plain vanilla service and then charging for extras," said Ray Neidl, an airline analyst with Calyon Securities.

The fees are not altogether new. European discount carrier Ryan Air has long charged for each checked bag and now has even added a handling fee for credit and debit cards transactions.

But now more U.S. carriers are joining the fee game. Spirit Airlines recently announced that as of June 20 it will begin charging $10 each for checked bag -- $5 if the fee is paid online. A third bag and each one after that will set you back $100. Cokes will be $1 each, please.

Even Southwest Airlines, long the friend of the budget traveler, has said it is also looking at extra fees, such as charging $10 for customers who want an assigned seat, but has yet to announce any formal plan.

Northwest Airlines launched Coach Choice in March 2006, setting aside some preferred economy seats, such as exit rows and aisle seats near the front of the cabin for customers willing to pay $15 extra. The airline says about 5 percent of its coach seats are reserved this way. Northwest wouldn't say how many customers have taken advantage of the program.

For several years, United Airlines has been offering an Economy Plus section at the front of coach for a premium. The seats there have five extra inches of legroom. Northwest and United allow elite members of their respective frequent flier program claim the better seats at no charge.

Robert Mann, president of R.W. Mann & Company, an airline analysis and consulting business, said the trend started after the Sept. 11 terrorist attacks when airlines abandoned food service over security concerns but then turned it into a for-pay service on some flights.

Mann argues that baggage charges will decrease the number of checked bags, making service more efficient. But, he warns, if airlines nickel and dime customers too much, they might lose business.

Air Canada rolled out a new set of add-on services in October. Customers in its cheapest seats -- regular coach seats known as Tango class -- have to pay $13 if they want to select their seats in advance. Passengers who pay more for their initial ticket -- in any of the other three coach booking classes -- get to select a seat for free.

Air Canada also offers Tango passengers a $4 discount if they don't check bags and $3 off if their ticket customers opt not to earn frequent flier miles.

"The general notion of air travel is that airlines add fees to whatever they offer -- you want something, you pay extra for it," said Air Canada spokesman John Reber. "I think what distinguishes Air Canada's approach is that we reward travelers for not asking for certain services by giving them a discount."

So far, the approach seems to be working. In the fourth quarter of last year, Air Canada reported that nearly half of its customers paid for a higher class of coach service even when a cheaper Tango seat was available. (Tango class exists only for flights within Canada or flights to Florida.)

The airline said 10 to 22 percent of its our customers got a discount for not checking bags or accumulating frequent flier miles. Also, 5 to 18 percent purchased on of the add-on features such as seat selection, on-board meal vouchers or lounge access.

"Air Canada probably does the best job of anyone I've ever seen. It gives you an incentive not to use that service. I think that's the smart way of doing it as opposed to dinging people who do," Mann said. "You feel like it's a benefit."

One U.S. airline has so far resisted most of the cuts made by its competition and is now playing up the amenities in a new series of ads.

Continental Airlines has a TV commercial featuring two flight attendants standing at the front of the plane saying "buh-bye." But it's not passengers they are talking to. The camera zooms out to see them throwing pillows, blankets and food out of the plane.

"While other airlines are saying goodbye to pillows, blankets and meals, Continental is still everything you should still expect from an airline," an announcer says.

"After 9/11, airlines were looking for ways to cut costs and a strategic decision that we made was to find ways to cut costs that wouldn't be in areas customers would taste, feel or impact the services customers got," Continental spokeswoman Mary Clark said.

A large part of Continental's business comes from its hub in Newark, N.J., which attracts frequent business travelers from the New York market. That market is still a lucrative one and while airlines are cutting costs in coach, they are still pumping new money into their business and first-class services.

"American was advertising a couple of years ago more room in coach and people aren't willing to pay the premium price," notes Neidl, the airline analyst with Calyon Securities. "They want a bare-bones ticket -- from there they may pay upward."

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