Checked Bag Fees: Money for Nothing

May 22, 2008 — -- Heading to the airport this holiday weekend? Well, if you're planning to check bags you'd better bring some extra cash.

American Airlines announced Wednesday that it will start charging passengers $15 next month to check a bag. The airline -- like many others -- had already announced plans to charge $25 to check a second bag.

But just because these airlines are charging you for what was once free, don't expect any improvements in service. Airline experts said there will still be plenty of lost bags.

Ray Neidl, an airline analyst with Calyon Securities, said because of high gas prices the airlines need cash and passengers shouldn't expect any change in how their bags are handled.

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"The systems are still going to be the same," Neidl said.

Basically, he added, fuel prices are forcing the airlines to do something they might have done anyway.

"People want bare-bones ticket prices. They don't want to be subsidizing other passengers checking in bags," Neidl said.

Rick Seaney, CEO of FareCompare.com and an ABCNEWS.com columnist, also cast doubt about any improved baggage service.

"Sure they'll charge $15 to check a bag, but if you think this will get your bag to your final destination … in your dreams," Seaney said. "I doubt this new $15 first check bag fee is going to come with a money-back guarantee if/when your bag doesn't make it to your destination."

Robert Crandall, former CEO of American Airlines, said today on "Good Morning America" that the new fee is "a reflection of the desperation of the industry." He noted that baggage "weighs a good deal" and therefore burns a lot of costly fuel.

But he said his former company's move might not have been the best approach.

"I think frankly the industry might be better off if it raised fares and had everybody contribute," Crandall said. But in the past when airlines have raised fares there have been times when one refused to go along with the hike, he said, undermining others.

Crandall also said that more government regulation of the airlines might solve some of the industry's perils.

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It is not clear whether other airlines will follow American's lead.

Delta released a statement Wednesday saying: "Though record-breaking fuel prices are causing us to look at costs in every area of our business, we have no plans at this time to charge for a first checked bag."

Other airlines took a similar wait-and-see approach.

Air Canada, American, Continental, Delta, Northwest, United, US Airways and Virgin America are all charging $25 for that second bag, according to SmarterTravel.com, which tracks such fees.

JetBlue charges $20 and AirTran $10 for that second bag. Southwest charges $25 for a third checked bag.

Spirit charges for all bags checked -- $10 for the first and $20 for the second if paid in advance online. Otherwise, Spirit charges $20 at the airport for both bags. All airlines charge more for additional bags.

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Robert Mann, an airline industry analyst and consultant based in Port Washington, N.Y., said it is highly unlikely that any of these new fees will improve baggage handling.

"I don't think there's any transparency on that end. I suspect the answer is no," Mann said. "I think these are just to defray existing costs of operating and maintaining the baggage systems that are in place today."

Some passengers have half-jokingly suggested that airlines will next start charging to use the bathroom.

OK, so that might -- we hope -- be a stretch, but what's next?

"We're going down the path of pricing like air freight -- by the pound," Mann said.

No U.S. airline currently charges by weight, except when bags exceed their weight limits, but Mann sees that as the next trend.

"We're treated like freight anyway," he said. "It's becoming a self-service industry. You're forced to do everything yourself or you pay for human interaction."

Mann said the new baggage fees are going to make the situation on planes before take-off more difficult.

"It will create an incredible amount of gaming by customers who will try to carry ever-larger articles on aircraft to avoid the fees," he said. "It puts flight attendants into the role of monitors as to what and how many articles can go on board an aircraft."

What is still unclear, Mann said, is what will happen when the overhead bins fill up and people have to check their bags at the gate.

"Are they assessed the $15 or $25 fee?" he asked.

While the airlines don't appear to be doing much with baggage -- except charging more -- one U.S. airport is investing money to make sure fewer bags get lost.

McCarran International Airport in Las Vegas has more passengers starting or ending their trip there than any other airport in the country except Los Angeles International Airport.

That means a lot of bags go through its system.

Airport officials say their facility handles 70,000 to 75,000 outbound bags a day.

Some of those are bound to get lost.

But since the airport started a new radio frequency tagging system in September 2005, it has tracked bags with much greater accuracy.

Traditionally, when a passenger checks a bag, the airlines print a tag with the person's name, flight number, connecting airport and final destination. The tags have bar codes that can be read by scanners -- similar to those at the supermarket -- and also say in big letters the three-letter code for the destination: i.e., MCO for Orlando or DFW for Dallas-Fort Worth.

Passengers flying out of Las Vegas still get those tags with the bar codes, but their tags also have a little chip in them with a unique identifier. Using radio waves, those chips and the baggage equipment talk to each other, smoothing a bag's trip through the system.

With its old system, the Last Vegas airport found that it needed to have workers manually help 10 percent of the bags through the system. Now, virtually no bags need help.

The airport paid for the system and is picking up the tab for the added cost of the special tags. Each regular baggage tag costs about 4 cents but the tags with chips cost about 21 cents each.

That doesn't mean there aren't issues. The radio chip tracking system only works for the part of the system controlled by the airport -- basically the security scans. Once the bags are sorted to the different airlines, the airlines revert to the old bar code system. None of the airlines have invested money in such a tracking system yet.

Rosemary Vassiliadis, deputy director of the Clark County Department of Aviation, which owns and runs the airport, said in a statement that the airport is very happy with the system. Bags now make it through the system "with better than 99 percent accuracy."

"As a discretionary travel market, we can't afford to see our customers leave Las Vegas with a bad impression of our airport," Vassiliadis said.

This new system "won't solve every problem, but it's certainly played a part in allowing this airport to operate efficiently," she said, "and it's got the potential to do even more once it's rolled out [on] a wider basis."