There’s no telling how long airlines will be able to take advantage of low fuel costs.
One thing seems certain, though: Baggage fees aren’t going away.
Checked-bag fees, which have become an important source of revenue for airlines, produced nearly $1 billion in revenue for the 14 reporting U.S. airlines during the second quarter, according to data released Monday by the U.S. Department of Transportation.
Hawaiian Airlines, the state’s largest carrier, took in a company-record $21.5 million in bag fees. That was up 13.5 percent from $19 million in the year-earlier quarter and accounted for nearly half of the $48.8 million in net income that Hawaiian earned during the three-month period.
“The increased revenue comes primarily from more North American travelers flying with us to Hawaii,” Hawaiian spokesman Alex Da Silva said. “Overall, Hawaiian Airlines flew 5.3 percent more passengers in the second quarter of 2015 compared to the same period a year ago.”
Hawaiian also earned an additional $4.7 million from reservation cancellation and change fees. That was down 2.4 percent from $4.8 million in the year-earlier quarter.
Small local carrier Island Air, which has been reducing operations, brought in just $744,000 from baggage fees, down 25 percent from $992,000 in the year-earlier quarter. Island Air also received $77,000 in cancellation and change fees, down 53.9 percent from $167,000 a year ago.
Alaska Airlines, which flies 17 percent of its routes to Hawaii, took in $30.2 million in baggage fees last quarter, down 1 percent from $30.5 million last year. Its cancellation and change fees rose 15 percent to $27.6 million from $24 million.
Checked-bag fees were introduced by American Airlines in 2008 to combat higher fuel costs, and eventually other airlines followed suit.
“We didn’t love doing the baggage fees,” Alaska Chairman, President and CEO Brad Tilden said. “It started at $15, and we were slow to move it up. It was a move that other folks in the industry did, and you sort of come to the perspective that it’s going to be the structure in the industry. We’re out there competing hard on fares, and someone out there has a bag fee and we don’t. It puts you at a competitive disadvantage.”
Tilden, though, acknowledged that it makes sense to charge a fee to check baggage.
“There’s actually a fair bit of cost involved in handling a bag if you think about the airport infrastructure, the baggage conveyors, the ramp service agents carrying bags out and all that,” he said. “I think the cost of handling baggage is somewhat significant. What people would say is the product is coming unbundled, and people who don’t want to check a bag don’t have to pay for a bag, and people who need to check a bag are paying a fee.”