Note to Congress: You Can Learn From Bag Fees
WASHINGTON (TheStreet) -- Bag fees are unpopular and anti-airline hysteria consumes our country, so it is not surprising that some in Congress want to force airlines to stop charging fees to check a bag.
This is the wrong approach. Bag fees represent a learning opportunity.
In the past few years, the airline industry, which has lost money since the Wright Brothers first flew, has sought to create a profitable business model. It has done this by reducing capacity and adding fees -- primarily bag fees. A plus is that bag fees are paid only by people who use the service.
According to the Bureau of Transportation Statistics, the top three airlines in terms of bag fee revenue in 2011 were Delta (DAL) with $864 million, American (AAMRQ.PK) with $593 million and US Airways (LCC) with $506 million. During the same year, Delta's net income was $854 million while US Airways made $111 million and American, which declared bankruptcy in November, lost $2 billion.(UAL) sat in court for three years and American, trying to be a moral company in an immoral world, resisted for too long. Now, American may be forced to merge with a smaller, less prestigious airline.
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