Unbundling, are airlines overdoing it?

Fees, fares and the future of air travel

For the airline industry, it seems, profits are in the bag(s).

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Last week, the Department of Transportation reported that U.S. airlines collected $2.56 billion in baggage fees during the first nine months of the year, a 29 percent increase over the year before. The biggest hauls went to Delta, $733 million; United, $431 million; and US Airways, $388 million.

Perhaps that explains why US Airways President Scott Kirby recently told analysts that he expects fees for checked bags and other ancillary services to represent 100 percent of the airline’s profitability this year.

Think about that. For an industry that transports people from one place to another, solvency through surcharges represents “a structural change” (Kirby’s words), not just for US Airways, but for the rest of the industry and travelers, as well.

Vote: Have fees affected the way you travel?

New fees and fare hikes

Last month, Glenn Tilton, chairman of the recently formed United Continental Holdings Inc., predicted that the U.S. airline industry would post a $4 billion profit this year. If his prediction holds, it represents a stunning turnaround from the $3.4 billion it lost last year.

Meanwhile, the industry took in $4.3 billion in fees for checked bags and reservation changes alone during the first nine months of the year. That figure doesn’t include revenues for other ancillary services — everything from pet fees to priority boarding — which the government doesn’t break out, let alone revenues from the last three months of the year……. continued

Click here for this MSNBC news story.