This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Airline Fees: You Hate 'Em, Stocks Don't

(Visit our Transportation page for more news on the airline sector.)

CHARLOTTE, N.C. -- People may complain about airlines charging fees for bags and other extras, but they are paying them anyway, to the tune of hundreds of millions of dollars annually.

Combined with unprecedented capacity cuts, the new charges could help to turn the industry profitable in 2009. UAL (UAUA), for instance, says new fees will likely boost next year's revenue by $750 million. US Airways (LCC) expects a revenue gain of $400 million to $500 million.

"These fees do seem to work," Brad Tilden, CFO of Alaska (ALK) said at a Calyon-sponsored investor conference last week.

"A lot of times you see a $50 fare increase, then you look back at the end of the quarter and the average ticket price didn't go up at all," Tilden said. By contrast, he said, projected revenue from the fees actually materialize.

US Airways President Scott Kirby said fees result not only in new revenue, but also in operational benefits. "We've seen huge improvement in baggage numbers from having 10% fewer bags go through the system," he said.

RealMoney.com

Baggage handling has historically been a challenge for airlines, which are expected to transfer thousands of bags between aircraft in narrow time windows at hub airports. Not only is it time consuming, but "it's where we fail the most," Kirby said. Those failures are costly, leading to re-accommodations, deliveries beyond the airport and lost bag claims.

So far, US Airways is the only carrier to charge for drinks -- $2 for soda, juice and bottled water and $1 for coffee. As a result of the charges, which began Aug. 1, "the cabin environment is much calmer and more efficient," Kirby said.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,067.56 -30.89 -0.18%
S&P 500 2,002.28 -1.09 -0.05%
NASDAQ 4,598.1880 +17.9170 0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs