“Our customers tell us that they value comfort and convenience, and our subscriptions enable us to provide both year-round,” said United spokeswoman Karen May. “We intend for these subscriptions to be long-term offers.”
The timing of United’s announcement might have been better. Just a few weeks before it introduced the subscription plan, the Transportation Department had quietly released its 2012 report on baggage fees collected by airlines. The report showed that United earned $705 million for the year, second only to Delta Air Lines’ $865 million. All told, the domestic airlines raked in a record $3.5 billion in luggage fees.
If you’re a little confused about how much air transportation will cost after factoring in baggage charges as well as any other extras, then the subscription-based fee program is unlikely to help.
Airfares are rising — that much we know. For 2012, the average airfare cost a record $356, up from $343 a year before. Fees are also rising. Passengers spent an average of $10 in change fees and $13 in baggage fees (also records). But we don’t know precisely how much prices have jumped overall, once you factor in all the fees, because airlines aren’t required to report all this revenue to the government as separate numbers.
Since 2008, the major airlines have aggressively “unbundled” such items as luggage fees and seat reservation fees from their ticket prices, a clever marketing strategy designed to make the cost of air travel appear lower. At the same time, they’ve often failed to clearly disclose those costs at the point of purchase, leaving passengers with the impression that they were getting a deal. The resulting confusion has been a windfall for most airlines, which collected billions of dollars in fee revenue over the past five years.
Having a luggage-fee subscription injects yet another layer of complexity, making it harder to determine the actual price of air transportation.
Interestingly, this appears to be a recycled idea. United shelved a similar program in March 2012, after its merger with Continental Airlines, for technical reasons. But that didn’t seem to dampen the reaction to its reemergence from airline watchers.
“I think this will be very successful,” predicted Jay Sorensen, whose IdeaWorks consultancy advises airlines on fees. “From the airline’s perspective, it’s a home run. The consumer pays for the benefits up front, so of course they’ll return as a consumer whenever they’re shopping for air travel.”