Are airline bag fees good business?

January 13, 2010Jon Brooks Comments Off

This post on Joe Sent Me , a blog for business travellers, is nine months old, but I like it anyway. Using an anonymous interview with an airline executive as a launching point, blogger Joe Brancatelli argues that the airlines that imposed baggage and other fees the quickest are the ones that are losing the most customers. Quotes from the executive:

Accountants have rigged the system. They create a stream to track the ancillary revenue from fees and they look like heroes when they can report they earned the airline millions of dollars of “new” revenue. But ask them if they can track the revenue we lose because passengers booked away or chose not to fly and they look at you like you have nine heads.

The bean counters can’t track the revenue dilution of all these new fees. They don’t want to. We miss the forest for the goddamed trees all the time. And the CEO acts as if fees are found cash. Meanwhile, no one asks why our overall revenue is plunging and we’re losing money quarter after quarter. Everyone acts as if one thing has nothing to do with the other.

“The overall numbers don’t lie,” writes Brancatelli. “The faster airlines add fees for basic services like checked bags, the faster their total revenue declines. And as my airline-executive friend ranted a few weeks ago, it’s the forest that matters, not the trees or the fees.”

Posted on January 13, 2010 at 2:17 pm
http://economybeat.org/business/are-airline-bag-fees-good-business/
http://economybeat.org/business/are-airline-bag-fees-good-business/trackback/
Categorised under : business , consumers
Tagged with :

Comments are closed.