Jan. 5, 2011— -- Airline fees are not going away anytime soon and -- if past years are any indicator -- 2011 is likely to bring a whole new bevy of fees to the flying public.
Why? Fees are big business for the airlines and one of the main reasons they have been profitable in 2010. The 26 major airlines tracked by the federal government took in $3.84 billion in profits from July to September, according to the Bureau of Transportation Statistics. More than $2.1 billion of that profit came from fees. (Baggage fees and reservation change fees were the two largest chunks at $906 million and $646 million respectively.)
The airlines took in countless other non-airfare revenues, from charging for seating assignments and on-board sales of food, drinks, pillows, blankets and entertainment. Remember the $1 you paid for headphones or that $5 to watch HBO? Well, all of those fees are in addition to the $2.1 billion noted above.
"The airlines are only profitable because of the fees," said George Hobica, president of airfarewatchdog.com. "When airlines try to raise fares to a level that reflects the actual cost of doing business, passengers tend to stay home or drive. It's a very price-sensitive business."
Wall Street analysts and industry watchers all say the fee frenzy is likely to continue. That is especially true as the price of oil starts to creep up again.
"How do they pay for the extra money needed for oil? Fees," Hobica said.
In case you were wondering, Spirit Airlines reported the largest percent of operating revenue from fees and other non-airfare revenue -- a whopping 26.9 percent. Spirit -- which started charging for overhead bin carry-on bags in 2010 -- has become America's answer to European discounter Ryanair, which is known as a leader in fess.
So with all that in mind, we asked Hobica what fees he is predicting for the new year. Some of them will shock you.
No. 1: In-Person Check-In Fee -- Airlines want passengers these day to use those airport kiosks or online check-in for everything. And there's a good reason for it: they save money by having to hire fewer people to work the counters.
"Who cannot use a kiosk?" Hobica asked.
Ryanair already charges a 40 euro fee -- the airline calls it a "penalty" -- for those passengers who need to have their boarding pass reissued at the airport. In other words, do it yourself or pay the fee.
Spirit CEO Ben Baldanza told ABC News in August that he was considering a new fee to talk with a human at the airport.
New Airline Fees
No. 2: Fee for Paying With a Credit Card -- Most of the airlines have gone to cashless cabins, requiring a credit card for all purchases. But that pro-credit movement in the skies doesn't mean they can't ding you for booking a ticket with a credit card.
"Let's face it, it costs the airlines money to accept credit cards," Hobica said, adding that many overseas airlines already charge such fees.
One possible break could come for people with airline-branded credit cards. Delta and Continental already waive most baggage fees for passengers with their cards. There might be a similar waiver of this fee.
Otherwise, the only way to avoid it is buying your tickets in cash at the airport or possibly using a third-party site like PayPal. Then again, showing up at the airport with a stack of 20s might raise some red flags with the Transportation Security Administration.
No. 3: Checked Bag Fees by the Pound -- Right now most airlines charge a fee for checked bags and then additional fees for overweight bags. For instance, Delta charges $25 for the first checked bag ($23 if you pre-purchase on the internet) for luggage up to 50 pounds. Passengers with bags weighing 51 to 70 pounds get hit with an additional $90 fee. Those with bags weighing 71 to 100 pounds face $175. Hobica suggested that instead of incremental fees, the airlines might add a few dollars for each extra pound. That will really make you think twice about packing that extra sweater.
No. 4: Luggage Distance Surcharge -- A checked bag costs the same whether your flight is an hour long or five hours long.
"If it is a fuel issue, and they claim it is, then why shouldn't they charge more for longer flights?" Hobica said.
Maybe the airlines, he suggested, keep the fees the same for flights under 1,000 miles and tack on another $10 or $15 for those longer trips.
No. 5: Internet Convenience Fee -- Ryanair charges 5 euros per passenger each way to "cover costs associated" with its booking system. Several years ago, US Airways briefly charged $5 for booking online and Allegiant Airlines also charges an online booking fee ($14.99). Hobica said it's only time before somebody else charges such a fee.
This might be especially true if the airlines eliminate booking through third-party websites as American Airlines is trying to do. You might save money by going to the airport but just don't speak to a human, or else that fee could kick in. And remember to pay in cash.
No. 6: Carry-On Bag Fees -- Spirit became the first to charge for bags that don't fit under the seat in front of you. The fee is actually more than that to check bags, a move the airline said was made to speed up the boarding process. Other airlines resisted but Hobica said it could catch on.
No. 7: No More Price-Drop Refunds -- It's a little-known trick in the airline world but passengers can often rebook their exact same flights if the price drops after they make a purchase. Alaska, JetBlue and Southwest don't charge anything to take advantage of a price drop, while other airlines charge $75 to $150 for domestic tickets, and more for international flights. So the price needs to drop more than that change fee in order for you to take advantage of the lower fare.
None of the airlines actually gives you cash back; instead you get a credit good for travel on one of their flights in the next 12 months.
Hobica questions why American carriers allow such refunds and suggest they will be eliminated in 2011.
No. 8: Infant Fees -- Right now, children under the age of two who sit on their parents' laps fly for free.
The National Transportation Safety Board wants to change that. The federal agency says that a large number of air plane crashes are actually survivable but only if everybody is buckled up. And as much as a mother or father might love their child, it is highly unlikely that they will be able to hold on tight enough during a crash to stop the baby from flying through the cabin.
While the government decides what to do, Hobica said the airlines might add in some fees. Ryanair charges 20 euros for lap children. Why not United?
No. 9: Name Change Fees -- Some people might actually welcome this, if the price is right. You buy a non-refundable ticket you can't use, so rather than throwing it out you'll pay a fee to assign it to another passenger. The key question here is what type of fee the airline charges and could they resell your vacant seat for a higher price.
No. 10: Fare Lock-In Fees -- In December, Continental Airlines introduced FareLock, a new service that allows passengers to pay fees starting at $5, and rising to $9 or more, to hold a seat at a given price as a hedge against rising airfare. The price can vary depending on the itinerary and other factors. Other airlines haven't yet followed but Hobica said they will all be watching.
No. 11: Pay to Pee Fee -- This is actually one that has been floating around for a few years, ever since Ryanair said it would consider charging for the bathrooms. But don't fret, Hobica said, the fee has yet to arrive in Europe and won't be coming here anytime soon.
"It would never happen in the U.S. ever. People would just revolt," he said. "People would just leave the door open. They will just put a roll of toilet paper and jam the door open."