Airlines Report Almost $2 Billion In Record Baggage and Change Fees in Second Quarter of 2017

220px-United_Airlines_-_N14219_-_Flickr_-_skinnylawyer_(1)For years, we have been discussing how airlines have repeatedly misled Congress and the public about baggage fees, which were always an avenue to bilk customers of billions.  Now a new report confirms again that this is not about fuel costs or falling revenues.  The airlines are continuing to cut space for passengers, add charges for simple comforts, and raising baggage fees as they hit record profits.  The U.S. airlines alone pulled in a record $1.2 billion in bag fees and another $737.5 million in reservation change fees in just the second quarter of 2017.

The airlines have found a way to way like a monopoly without triggering laws like the Sherman or Clayton acts.  They operate on the assumption that the public has a short memory and most travelers have only a dim recollection of what it was like to travel in relative comfort.  They have made air travel a grind — physically and financially.  I have cut my air travel down by at least half because it is simply not worth it. Nevertheless, when I fly, I go with more expensive seats under the coercive plans of these airlines.

The diminishing services of the airlines is due to the successful bet of the airlines that the public will has a high tolerance for discomfort and lower and lower expectations (due to their own policies).  The result is highway robbery without the highway.  Airlines made $7.1 billion in the budget year ending in September 2016.

The airlines are creating a wide separation of classes between first and economy. They continue to count on people buying the lowest fares with no amenities while clipping passengers at every turn for fees.  The airlines have the same attitude as the NFL to their customers: they are treating like sheep to be sheared until they are  mutton.  Of course, people are dropping NFL games so there may be a limit . . . but the airlines are betting that they have not hit rock bottom yet.

43 thoughts on “Airlines Report Almost $2 Billion In Record Baggage and Change Fees in Second Quarter of 2017

  1. It appears that the airline industry has morphed into a new line of service. While they do still engage in the business of transferring passengers to different locations, it appears that their new lines of work are creating extra charges for ticket changes, and charging for luggage instead of passengers. Ferrying passengers is now a secondary function, as far as revenues are concerned. And luggage doesn’t file complaints against these airlines.

  2. squeeck, you GO girl!! Keep tellin’ it like it is. For shame that we have been reduced to shuffling through the airports in socks and allowing mentally retarded folks in uniform to feel us up! Totally grotesque.!!

    • and allowing mentally retarded folks in uniform to feel us up! Totally grotesque.!!

      People who fancy themselves Tribune of the Working Man will commonly reveal themselves.

  3. Flying these days is depressing — especially if one remembers the good old days where stewardesses/stewards were actually cheerful and helpful. The TSA minions and the whole process of removing shoes, etc. are annoying and unnecessary. Armed guards with dogs would make airports safer.

    Just wish we had high speed trains so flying could be avoided.

  4. I just hope that some republican in congress does not read this post, because I’m sure that he or she would sponsor some kind of “TAX RELIEF” for these poor airlines. And I’m sure that if Trump got his way and the FAA was privatized prices would come down. Why should a pilot make more than a bus driver or a cabbie? And why should those planes be maintained all the time? Why should taxpayers pay for new or rebuilt airports? I see highways that nobody uses at 4:00 in the morning. Anyway you look at it, they need more “TAX RELIEF”

  5. Well said, Professor! I’m reading this while squished into a seat with no legroom (and I’m 5’3”) and the captain has just told us that there is no air conditioning while
    We’re on the runway so we should all keep our windows closed because “there’s nothing to look at anyway.” Appalling!

  6. Turley

    What an elitist rant. Wouldn’t your need to rant be better focused at the health care insurance industry. 1200+ insurance companies, all making record profits, off of who? Not just someone that flies but everyone that has insurance. CEOs with private jets, yachts, mansions; hundreds of thousands of subsidized employees-by us; all fleecing the public. Insurance companies refuse to pay doctor prescribed stuff with an, ‘We do not deem it medically necessary.’ The patient pays out of pocket and get to appeal a brick wall. C’mon Turley, how about getting off of your high elitist horse. What’s next, not enough caviar with your order. No wonder this country is going down the tubes; the rants are for splitting hairs on what is free speech and what is not, and suffering while paying less than ever to fly around the world. Turley, if you want to get into politics, this is the way to the swamp.

    • Issac, I agree with you, but government intervention has a strong correllation with increasing consolidation and higher costs in the healthcare sector. We need much less intervention and where required, better aimed intervention. That viewpoint opposes your socialized view of healthcare.

      • Allan

        As far as health care and health care insurance goes, all statistics point to the opposite. Government oversight and control of the administration of health care insurance has proven in all peer nations as well as with Medicaid and Medicare to cost less, sometimes a fifth of the cost of private sector, for profit, insurance. We are paying for the administrative costs of over 1200 private insurance companies in the US, plus the maze of administrative work and costs necessary by doctors, clinics, and hospitals. If you look at the administrative costs alone there is absolutely no argument that health care costs would be reduced if health care insurance was administered state by state, as it is in Canada-province by province. Pointing out failures in either system does not negate the actual factual statistics. Yes, every system falls short, however, the US system only works if you pay through the nose. A number of things could be done to shrink the nose. First do as all other countries have done and create a core insurance system that is administered by provincial or federal governments. This automatically equates to less cost as several hundred thousand workers will be unnecessary and thousands of CEOs will be given the boot. This will put a lot of people out of work, the private jet industry will take a hit, the yacht industry will take a hit, the high end real estate industry will take a hit, etc. Next ban all media advertising for pharmaceuticals. The US is the only country that does this and it represents 20% of the pharmaceutical industry’s budget. R & D represents 16% of the budget. It is stupid and adds insult to financial injury. Unfortunately a lot of add people, jets, planes, Congress and Senate payoffs will suffer.

        So, regarding your knee jerk reaction to ‘socialized’ health care, try taking a peek from this perspective. We have the most socialized health care system in the world. The beneficiaries are several hundred thousand redundant workers, thousands of CEOs, the luxury goods industry, our representatives and their political campaign machines, etc. Socialism is not peculiar to some antiquated and narrow minded perspective that links it to everything that is wrong in this world. Better a socialism that benefits all than this socialism we have now, that benefits a few. Do the math.

        • “As far as health care and health care insurance goes, all statistics point to the opposite.”

          Issac, smart people try to stay away from the word “all” when dealing with such a controversial subject. You aren’t dumb so that is your ideology talking rather than your intellect. I was not supporting any specific plan other than to remind you that with every major step of regulatory control in the direction of socialism (to control spending) we have seen a correlation of higher costs and a less productive medical sector.

          You have made a lot of statements each one that can be debated and I’ll permit you to choice of one and then show you where you are wrong or if you are correct I will agree with you. Let me point you to one study that compared the treatment of certain common cancers internationally CONCORD. The US did the best and was rated #1 or #2 in such treatment. Infant mortality has often been used as a metric of the left, but US infant mortality statistics are good. When it comes to low weight births we are best in the world. When it comes to normal deliveries we are among the top. Our slightly higher infant mortality rate is due to many factors including social problems such as drugs and young mothers. It isn’t due to the medical care offered (though that could be improved) rather we have so many low weight births that have higher infant mortality rates. There are many other factors such as registration problems where some countries at least in the recent past let small living babies die on the table. Those were not registered as deaths rather registered as miscarriages.

          You talk about Medicaid, but do you know the conclusion of the Oregon Medicaid study, a completely random study? No benefit from Medicaid. I disagree slightly with the conclusion for certain reasons, but the data was good and the conclusion real. Did you ever look at the Ware study that showed fee for service to lead to better medical outcomes than HMO’s? There is a reason behind that and government ACO’s are little more than an attempt at reinstating HMO’s for the entire population. Have you noted how the studies show the failures of the ACO?

          Do you realize that when comparing overhead Medicare doesn’t use the costs per bill rather costs/total payment. It is almost as expensive to manage a bill for a Medicare patient where the government pays out $50,000 as a private insurer that pays out a claim for $35. Therefore if one bases the costs on claims paid which is more appropriate then suddenly private costs dramatically fall. I’ll refer you to Mark Litow’s paper which discloses the hidden costs of Medicare.

          A study done a number of years ago comparing the numbers of mammograms and pap smears given to women in Canada and the US showed that in this case of early diagnosis (erroneously referred to as preventive care) American women received more than Canadian women. Ho hum many say, but when uninsured Americans were compared with their Canadian counterparts the uninsured Americans received the same quantity of these early diagnosis tests as their Canadian counterpart.

          I’m here any time you want to focus on one aspect of healthcare in depth because your list of responses are opinion much of which has been proven wrong.

          • Allen

            You can cherry pick faults in any system. However, isolated faults are not the arguments needed when the system as a whole is a failure. The private insurance system is a fraud, a failure, and there because of our oligarchical government. We subsidize the private sector to employ hundreds of thousands of unnecessary administrative: billing, clerical, dispute, etc workers, thousands of CEOs, etc. This is corporate socialism. Ask yourself, what sort of socialism do you want? Socialism that benefits all or corporate socialism that benefits a select few. Either way we pay twice to three times what our peer nations pay for a system that is ranked 35th over all. We pay for unnecessary advertising of pharmaceuticals. Regardless of the advances, which would be there in any case, our system is wrong, benefits the oligarchs, and not the people who pay for it. Remember, all the money, whether it be directly from the people in the form of premiums or indirectly in the form of government subsidies, comes from the people.

            Allan, give me a logical, rational, honest reason why the American pharmaceutical industry should be the only country in the world that advertises drugs on the media. Do you rely on the media when it comes to drugs? Advertising budget is 20% and R 7 D budget is 16%. Would you take a 20% reduction in drug costs if the US wised up and banned the advertising of potentially dangerous drugs on TV using animated stories of ‘feeling better-so buy this’?

            Allan, given the over 1,200 private health insurance companies with all their exorbitant costs are re insured by a half a dozen global titans like AIG, Swiss RE, German RE, Lloyds, etc. do you honestly believe there is any competition? Do you honestly believe that choice equates to thousands of plans and programs that no one can understand and that necessitate hundreds of thousands of workers to navigate?

            Allan, focus on these two issues and if they were to be resolved, the US health care system would improve and cost half of what it does today, before addressing the cost overruns of the medical system itself.

            • “You can cherry pick faults in any system.”

              Issac, I didn’t cherrypick faults, but replied with a broad range of information and studies that demonstrate what you said was an opinion not based upon studies or fact. I know you want to say it is cherry picking because once one gets to the specifics your arguments fall apart whether they involve cost, quality or access.

              “The private insurance system is a fraud, a failure, and there because of our oligarchical government.”

              In this statement there is a bit of truth for we have in great part socialized medicine and that has caused the fraud you speak of. Classical insurance is based upon risk so once one separates risk from premium one no longer has real insurance. That is what the socialists have done to make the insurance system fraudulent and super expensivw with access problems. This doesn’t mean that risk based insurance cannot help one in need. It certainly can and can do so better with subsidies and the like. Did you look at the CONCORD study which demonstrates the quality of US healthcare?

              “ranked 35th over all” Do you understand why we are number 35. Is has more to do with our socio economic problems than it does with the healthcare sector. A lot of that ranking is based upon egalitarianism so if the solution to all cancers for all people (except the leaders and their friends) were a bullet in the head they would be ranked close to number one. That is the reality of the game the socialists play.

              “ why the American pharmaceutical industry should be the only country in the world that advertises drugs on the media. Do you rely on the media when it comes to drugs?”

              This is another of those two edged swords. In socialist nations if the government doesn’t want to pay for an expensive medication that improves survival rate they are better off not letting the public know that such a treatment is available. However, advertising is not the problem that we face in that industry. Liquidity constraint is.

              “ do you honestly believe there is any competition?”

              What has caused the loss of competition among insurers? US regulation. Take note how ObamaCare caused the consolidation of insurers and at the same time prevented new insurers from entering the marketplace. That is precisely what socialism does though the process is masked from the repients.

              • Allen,

                Thank you. What kills me about isaac is that he first wants regulation to be put in place and then once it is there, blames the market (crony capitalism) for its failure. I love when he points out the 1200+ companies doing all of this “administrative work”. Who is forcing them to do this work? I’m no expert, but I imagine that “administrative work” was invented by private industry. He always ignores that the govt. ruines the market be getting into it i.e. college tuition.

                • Thanks jim22. I agree. Issac only tells half the story and blames failures on the free market system. He forgets that in the US we haven’t had a real free market healthcare system since WW2. Government has been trying to reduce costs since then and every major push has led to increases in prices. He thinks that by tossing a lot of Medicare administration work onto the physician and Medicare costs onto those less than 65 that total costs fall when all that happens is that the physician has to give less time to his patients and everyone else’s premiums rise.

                  • Allan, something Megan McArdle pointed out some time ago: the share of personal income devoted to veterinary care has seem increases of similar magnitude in recent decades, even though veterinary care is cash-on-the-barrelhead.

                    There are bad problems with the financing scheme generating inefficiencies, but it’s a reasonable wager we’d be spending more on medical care anyway: there has been a great deal of innovation in the post-war period making medical interventions more salient in influencing outcomes and there’s a limit to how much process and product improvements in the production of goods and services available in 1940 can improve utility.

                    Some libertarians have this idea in their head that they can treat medical care as an ordinary service, like auto repair. They’d be in for a rude shock if their plans were ever implemented.

                    • DSS, Technology has indeed increased healthcare costs, but it also saves lives and can save money. The problem is that by treating heart disease so aggressively with the use of high technology we leave ourselves with a more costly group of patients that have congestive heart failure. If the patient were permitted to die those costs would not have been incurred.

                      On the other hand patients are able to be treated as outpatients with limited hospital stays for situations that used to lead to confinement for several weeks. Because of mostly third party payer due to our tax laws the industry is slow to adopt cost saving methodologies and when it does government regulation causes the corrections to be done frequently in the worst possible way.

                      Much of medical care can be treated in a similar fashion to ordinary service and if that were to happen that would pull prices down. There are other considerations that make the pure libertarian approach difficult to swallow, but many of these considerations could be managed with little interference to the marketplace.

  7. “I have cut my air travel down by at least half because it is simply not worth it. Nevertheless, when I fly, I go with more expensive seats under the coercive plans of these airlines.”

    I believe until recently airline stocks have been terrible investments so apparently they haven’t been long term successful coercive “theives”. The airlines are there to earn a profit and if they abuse the public too much they will lose travellers just like they are losing you. There is competition for the airline industry and it is known as the Internet and meetings held via teleconference something I find much preferable to travelling. Take note how television inteviews are done live in people’s homes despite the distance. I have travelled in the US and abroad quite frequently so I am not enthusiastic about the limitation of space and charges for luggage, but if I am correct the price per mile flown has fallen not risen so the consumer has been the benficiary.

    The biggest problem I personally face is from TSA and all their rules put into place that make the trips longer by hours. For me that is worse than the new ways the airlines charge especially since prices have fallen over the years while fuel prices have dramatically risen.

  8. It is surprising how many people are still willing to undergo the oppression that occurs when using airlines. Why travel when every city looks the same? Campinas Brazil has the same Wal-mart, Pizza Hut, Toyota and Honda Dealerships that one passes when driving through Boise Idaho. Beaches, bicycles, food, museums, churches, mountains, rivers, cows are the same around the world. If you want a taste of another culture, read a book about how cultures used to differ from one another, or drive anywhere you would like to go on You-Tube. If you want to meet with people to establish bonds, there are plenty of people locally, even people who speak a different language and came from a different country. Travel is highly over-rated today. Even Rick Steves and Joseph Rosendo would probably admit that in private.

    • I agree with you on the homogenization of cities through the inundation of pizza huts and mcdonald’s. It makes for very boring travel. I returned recently from Kauai, one of the Hawaiian Islands. The Southwest section of the island is mostly free of box stores and corporate fast food restaurants. Most of the East part of the island is tourist trap, or Costco etc. It is so disappointing.

      When I bought groceries I shopped at Big Save. Anything to get away from the mainland monotonies.

      • Try China or Southeast Asia and stay off the tours and tourist trails. This area of the world is very different. We had a lot of time each time we went so we could go to areas where only few Americans go. Be prepared to travel differently.

  9. I started in the airline industry in the 1970s. I saw the beginning of deregulation. And worked through 2 decades.
    I was working for another carrier when Frank Lorenzo took over Contiental airlines in the 80s and instituted the non-refundable low fare ticket. Other carriers followed suit.
    What was a normal 3 minute reservation call for booking, became a 7-20 minute call of torturing the public,
    And explosion of hiring in everyone’s reservation dept to explain the insane rules.
    Lorenzo is remembered in the industry for his union-destroying tactics and his famous line of telling a flight attendant that with her complaint of her new low wage that she cannot afford her house, he alleged to have said,
    “Flight attendants should not be owning houses”.

    • Well, until people quit lining up to get fleeced, nothing will change. I have had several reasons to fly in the last few years, but I refuse. I just drive my car. it takes longer, but nobody’s groping me, or making me stand in line forever. If enough people ever think like me, things will change. But people will put up with a lot of crap sometimes.

      Just like with the NFL. I turned them off last year. I pretty much only watched the Saints and the Cowboys when they played, or when Penelope was having a football TV party. But now, screw ’em. I hope most viewers turn them off but it will probably not happen because most people don’t really care enough about the country to do that.

      On the bright side, you never realize how much time you can waste on a football game until you stop watching. Truth is, it’s like 3 hours of pickup truck and beer commercials.

      Squeeky Fromm
      Girl Reporter

      • Get TIVO where you can fast forward, Start the game about an hour after it starts and liberally use the FF button. It’s the only way I can stomach the news on TV. I can go through several channels and several hours in a relatively short time with FF being used for commercials and dumb reporting. It also permits viewing while doing other things (I multi-task) because if something was missed all one has to do is press the rewind button.

        • If you haven’t the ability to fast forward, I recommending hitting the [Mute] button. It makes the commercials more bearable.

        • Even when I watched the games, I was multi-tasking. Reading a book, solving the Sunday Crossword puzzle, petting cats, surfing the net, playing my guitar – – – my mind is one of those that is constantly busy on several levels – – – the commercials aren’t necessary a bad thing. Maybe just a chance to practice B Minor chords more or something.

          One day, though, I think I will get a Tivo whenever I cut the cable cord. But, since me and Penelope split the cable bill, the prices are not too bad for me. What I don’t like about cable is really more all the crap stuff channels that are on it, like 90+% of it I don’t watch.

          Squeeky Fromm
          Girl Reporter

          • “my mind is one of those that is constantly busy on several levels” — SFGR

            That is hilarious!!

            Constantly busy on several levels such as: cats, limericks, television, preparing for the apocalypse, making sure you have your revolver and knife on you whenever you leave your parent’s basement — ready to kick ass — but no emotional ties to anyone, and starting to despair at this self-imposed conundrum.

            Life is what you make of it, good luck.

            • Huh??? No emotional ties to anyone??? Oh, I have emotional ties with people, family and friends and various critters. I just don’t have sex with any of them. And no, I don’t “despair”, as much as I do worry that what is a very viable and happy lifestyle for me will be screwed up some day if biology takes over my brain or something.

              Squeeky Fromm
              Girl Reporter

        • No. Because I don’t go through the TSA lines. But trust me, and I say this without ego, I am one of those girls who would get the full hands-on nekkid x-ray camera treatment. Probably still will for another 10 years or so. Maybe longer if my face doesn’t start sagging and getting those horrible cadaver lines so many women get in their 40’s.

          Squeeky Fromm
          Girl Reporter

          • “I am one of those girls who would get the full hands-on nekkid x-ray camera treatment.” — SFGR

            Most likely it would be due to your revolver and knife that you claim to always have on your person.

            But, of course, everybody wants you due to your skills at pumping water out of your parents’ basement, keeping the cats dry, and being able to tune a guitar.

            What a catch!!!

            • I don’t ALWAYS have my knife “on me.” It depends on whether I am wearing shoes or boots. If shoes, then the knife is in my purse. If i go to court with Penelope on something, then I have to leave the gun and the knife in the car. Gee, do I ever feel nekkid when that happens!

              Squeeky Fromm
              Girl Reporter

    • The rules were meant to differentiate between business travelers and ordinary passengers and discriminate by price. It’s a way of capturing more surplus for the producer but the people losing value are those financing the business travel, not the man in the street.

  10. Fly the friendly skies but buy your clothes and cleaning things on the other end. In order to clean your end. TWA- Transvestite Walkabouts Armistand.

  11. If you like your mode of travel you can keep your mode of travel. Be very wary of inviting the government in to fix your personal problem of having to choose how you and your belongings get from point A to point B.

  12. I always loved to fly but now that we are forced to sit so close to one another and they don’t keep the planes clean ,every time I fly I get sick.. It has ruined 4 vacations! So no reason to fly …..road trip!

  13. No one is ‘biliking’ anyone so long as the additional charge is prominently advertised or generally expected.

    Airlines are a Bertrand oligopoly. Their profit margins will be slim unless they are organized in a cartel (as they were from 1938 to 1978) or they have a local market dominance (as Northwest once did in Minneapolis – St. Paul. As we speak, gross operating surplus in the economy as a whole is about 42% of value added and north of 22% of gross output. For the air transportation sector, gross operating surplus amounts to 30% of value added and 13% of gross output. Their profit margins are better than they used to be, but they’re still under par.

    These are first world problems. The complaints about civil aviation neglect two things: Passenger-miles per person per year have increased eght-fold since 1975. Air travel is vastly more affordable than it was when it was ‘comfortable’. You’ve also forgotten about the scheduling headaches and the slow-as-molasses processing queues which were bog standard in 1975. You had more legroom and airport security was less time-consuming and elaborate. You can deal with the legroom deficit with a simple health-and-safety reg.

    • Excellent Squeek,
      And I believe since man has wanted to fly like birds since the beginning of time, if evolution was true, mankind would have its wings by now.
      But not even wing nubs.

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