Airline Fees: You Hate 'Em, Stocks Don't
( Visit our Transportation page for more news on the airline sector.)
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.
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