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Airline Trouble to Come: Carry-on Bag Fees, Mergers & More

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One month into 2013, American Airlines has released a major rebranding and Delta has reshaped its frequent-flier qualifications. But that’s just the start of the changes to come. Peter sits down with AirfareWatchdog‘s George Hobica to talk about how a major airlines is planning to add checked bag fees, potential airline mergers (yes, plural), and issues of market consolidation leading to rising airfares and devaluing flier miles.

Peter Greenberg: There is talk of a carry-on bag fee. What have you heard?

George Hobica: I have a source at an airline who’s not authorized to speak publicly. He claims that this airline–a major airline–is thinking of introducing a bag fee because it’s such chaos getting bags into the overheads. It’s taking up too much time to load and unload passengers as they cram bags into the plane.

PG: Any airline that tells you that they are thinking of doing a carry-on bag fee because of inconvenience to passengers has nothing to do with reality. An airline would consider doing it because it doesn’t want to leave any revenue on the table

GH:I have no idea how much they are going to charge. Right now Spirit and Allegiant do charge for the overhead space. The good news is that airlines are going to install larger overhead bins on many fleets: Delta, United, US Airways are all planning.

PG: You also suggest that there will be fewer regional jets.

GH: Regional jets are gas guzzlers I think they are going to replace them with larger some of the larger airbus planes.

PG: Now that can only mean higher airfares

GH: We are going to have higher airfares, absolutely. Plus, the US Airways-American merger will take place which is going to lead to higher airfares.

I do think that we are going to see more mergers. I think Frontier is up for grabs, Alaska too. It’s definitely going to lead to higher airfares and fewer alternatives to airline fees.

It used to be if you didn’t like the policies of Northwest you could go to Delta. Now they’re the same airline. It’s kind of an oligarchy now.

PG: For market domination on routes, you can fly between New York and Los Angeles on American, United, Delta, all of them. You can probably get a ticket for under $400, round-trip.

But if you want to fly the New York to Washington D.C. shuttle on Delta, a route they basically control, the fare can go up $900 for a last-minute coach ticket.

GH: We’re going to see frequent-flier miles harder to spend. Delta just announced that they are going to disadvantage the people that don’t pay high fares. If pay high fares on Delta, you will earn more miles or more points. I don’t think it’s a pretty picture.

If you get most of your miles with an airline credit card, you might want to consider a cash back card now, because the miles are going to be less valuable.

PG: They can change the rules on you on a whim…I think we need some regulation on frequent-flier programs now.

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By Peter Greenberg for PeterGreenberg.com

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