Two billion reasons why you pay to check bags

Or, you could call it “2 billion reasons why flight attendants shouldn’t get raises.” It works both ways.

The labor debacle at British Airways reminds us of the perpetual stupidity turmoil that has come to characterize the airline industry. Not to pick on BA, but the strike shows how disconnected the flight attendants are from the nuts and bolts of the business, and it translates across the pond. Yet, passengers are in a similar state of denial, feeling wronged by the airlines as they are nickled and dimed for “amenities” such as checking luggage. With the latest data from the Bureau of Transportation Statistics, it’s pretty obvious that airlines need to bring in some more money, and it has to come from somewhere.

In the United States last year, 769.9 million travelers set foot on planes (departing from, arriving to or completely domestic), a decline of 5.3 percent from recession-stained 2008 and off 8.2 percent from 2007, when 832.2 million passengers flew the friendly skies. This was the first time the number of fliers fell below the 800 million mark since 2004, in which 763.7 million passengers boarded planes. Think about it: 2009 is basically 2004. The airline industry has lost five years of growth.Meanwhile, fewer people were paying less for tickets, with the average fare falling $30 from 2007 to 2009 – settling at around $315. The increase in demand led to the shedding of around 700,000 flights from 2008 to 2009.

In all, this dynamic cost the U.S. airline industry approximately $2 billion … and that doesn’t include financial losses elsewhere. Fewer customers spending less led to a profound decline in revenue, and the airlines need to find a way to get it back. They’ve been able to close the gap, in part, through the ancillary fees we’ve all grown to hate. Every time you pay to check a bag, eat an unsatisfying sandwich or grab a little more leg room, you’re helping to keep these guys in business.

Of course, this would be a lot easier if the airlines would do their part. Price increases are frustrating when you see striking employees looking for more in a market where their salaries are effectively unsustainable. And with some flight attendants willing to subject themselves to interviews with 18 airlines in order to land a job, it’s pretty clear that demand is sufficiently high to make pay raises not only unnecessary but irresponsible.

So, it’s time for both sides of this equation to accept reality.

Passengers: you’ll be paying for extras. The airlines need it right now, and the beauty of momentum is that they’ll keep charging us for everything imaginable even when the economy recovers, because they aren’t going to slash a revenue stream that’s paying off.

Flight attendants: raises? Look at the economics of the situation. If passengers are paying more for the same service and demand is high for a shrinking number of positions, there’s no reason to pay them. With revenue in the tank and an aggregate net loss of $4.6 billion for 11 U.S. airlines last year, there’s no money for raises … unless there’s a new way to extract blood from a stone, of course.