United raises fee for second bag to $100

United Continental, the world's largest carrier, raised its fee to check a second bag on trans-Atlantic flights to $US100 after a similar January increase by Delta Air Lines.

The charge had been $US70, while Delta's fee was $US75 before its boost to $US100, Hunter Keay, a Wolfe Trahan & Co analyst, said today in a report. United's change "reflects an increase in costs associated with carrying bags such as fuel and handling," said Christen David, a spokeswoman for the carrier.

Airlines have turned to fees to bolster revenue as expenses such as fuel have pinched profits. Chicago-based United joins Delta, the second-biggest US carrier, with an increase as the peak northern summer travel season approaches. July and August have been the busiest travel months since 2009, according to data compiled by Bloomberg.

"Most of these fees tend to be levied on leisure travellers without premier status, the group most likely to respond to price stimulation should airlines be forced to lower fares to fill planes," Keay said in the report. "As those passengers pay fees in that scenario, the downside case for airline earnings should be limited."

Eric Torbenson, a spokesman for Atlanta-based Delta, wasn't able to confirm the size of that airline's fee increase. Delta's charge varies depending on whether bags are checked online or in person.

United and Continental, which merged in 2010, collected a combined $US630.2 million in baggage fees last year, according to the US Bureau of Transportation Statistics. Delta's fee total was the largest, at $US863.6 million, according to the agency.

Keay, who is based in New York, said that "it would seem these fees are being driven by elasticity assumptions, not just fuel costs."

Jet fuel for immediate delivery in New York Harbor closed at $US3.42 a gallon on April 29, the highest since 2008. The price has declined since and was $US2.76 today.

United reported a first-quarter loss excluding some items of $US286 million, or US87 cents a share, in April. That was narrower than the $US1.10-a-share average of 15 analyst estimates compiled by Bloomberg, as higher fares helped mute increased fuel costs.

Bloomberg

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