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The Real Reason Airlines Are Increasing Fees And Fares
Recently, Jet Blue Airways, announced their plans to increase the check bag fee by $5. This makes them the first airline to increase the fee which was $25.
Now, all major airline carriers are making plans to increase ancillary fees and fares. Airlines have been impacted by rising fuel costs and are looking to avoid a third straight year of declining profits.
“Carriers have struggled to keep pace with the rising cost of fuel, among many others,” John Heimlich, chief economist of Airlines for America, a trade group, told reporters on a conference call Wednesday. “I can assure you carriers are looking at every aspect of their revenue arsenals and cost elements to try to right the ship.”
These initiatives are becoming more apparent as the summer travel season begins to wind down. Southwest Airlines is charging more for its early boarding option on some flights. United Air has followed in the footsteps of Jet Blue and announced their plans for an increase in the checked bag fee as well.
Experts predict that the two remaining major carriers will follow suit in the weeks to come.
The airline industry’s annual profit peaked in 2015 and is headed for a third straight decline this year, according to Airlines for America, which represents companies such as American Airlines Group Inc. and United Continental Holdings Inc.
Jet fuel prices have risen 26 percent over the last 12 months to $2.22 a gallon. While strong competition and robust growth in the seat supply kept carriers from adopting broad fare increases during the busy summer travel season, many airlines are trimming expansion plans for the rest of this year and into 2019.
Airlines typically face a lag of as much as 12 months before such adjustments help them raise fares more easily.
Brian Sumers of Skift.com had this to say: “Fuel prices are rising, and airlines must recoup higher costs. We understand that. But we think airlines should raise fares, not fees. The good news for travelers is that fares go up and down depending on an airline’s costs and competitive pressure. But fees only go in one direction — up. Higher fees will be with us forever, including when fuel is cheap again.”