Airlines have best quarter ever … thanks baggage fees!

Airlines have best quarter thanks to baggage feesEvery time you pay to check an extra bag you’re making someone’s life better. The latest data from the U.S. Department of Transportation reveals that the third quarter of 2010 was the most profitable for the U.S. airline industry since the department began keeping score in 2002. The industry’s operating profit margin hit 10.5 percent in aggregate. Low-cost carriers, as a class, had an operating profit margin of 11 percent, its best performance since hitting 11.2 percent in the third quarter of 2006.

How did the airline industry pull this off? Recovering economic conditions helped, of course, but so did the stuff that passengers have gotten comfortable complaining about. More than $900 million in third-quarter revenue came from baggage fees, with another $590 million from reservation change fees. Then, there was another $646 million in ancillary fees. It all adds up to more than $2 billion for a single quarter.

So, while we’re all complaining about these extra fees, it looks like many of us are paying them, too.Spirit picks up the highest percentage of its revenue from ancillary fees at 26.9 percent, up from 24.2 percent in the second quarter of 2010 and 20.6 percent in the third quarter of 2009. Allegiant was next at 9.7 percent. Delta and US Airways derived 7.7 percent of their revenues from ancillary fees, with Southwest at 6.7 percent.

Of course, the money isn’t just going into the pockets of airline employees and executives. The six network airlines spent 25 percent of their operating expenses in the third quarter on fuel. United Airlines spent the most on fuel among network carriers – 25.7 percent of total revenue – with Allegiant leading low-cost carriers at 44.1 percent.

Before you feel too sorry for airlines when it comes to fuel costs, remember those profits. Four network airlines had double-digit operating margins, along with four low-cost carriers.

[photo by Tracy O via Flickr]

If easyJet goes under, you’re not screwed

If easyJet were to go insolvent before you could take a package you’ve booked online with the company, fear not: you’re insured. Since the beginning of the month, the European low-cost carrier has arranged with credit protection company International Passenger Protection to make sure customers don’t lose out if the airline as a whole takes a nose dive.

According to Paul Phillips, group treasurer of easyJet:

“We pride ourselves at being one of the leading and most innovative airlines in the UK and, despite our strong financial standing, we recognise that we have important legal obligations to adhere to under the UK Package Travel Regulations. We acknowledge our continued duty to give passengers financial peace of mind when buying travel packages online from us.”

Paul Mclean, director at IPP, said:

“The travel industry and travelling public have suffered a surge of financial collapses in the last two years and headlines of passengers losing their holidays are becoming commonplace. We are delighted to be working with easyjet to ensure its continued compliance with the relevant consumer protection legislation in place.”

So, if nothing else, you have one less worry when booking our next trip!

[photo by WexDub via Flickr]

Flying Wizz Air, European low-cost airline


I just flew with Wizz Air, a major budget airline in Europe whose name and stunts I had previously only snickered over. It turns out in addition to offering low fares across Europe, they are also the largest carrier in Hungary (at least according to Wizz, Malev Hungarian would beg to differ) and a major player in Poland, Romania, and Bulgaria. Last week I traveled to Bulgaria (look for some future Weekending posts soon) and decided to try to fly across the country from the Black Sea town of Varna to the capital city Sofia rather than spend another eight hours on a bus. As is often the case with budget carriers, Wizz has caught a fair amount of flack for their nickle-and-diming fare structure and customer service, so I was anxious to experience it first-hand.The booking process
The low-cost carrier advertises flights as low as 15 GBP from London to Poland before taxes and fees, and I found fares from Varna to Sofia starting at 78 Bulgarian (around $50 USD) plus a few bucks for taxes. Not too bad, a lot pricier than the bus but much faster. Enter the laundry list of service fees. First, you are hit up 5 Euros per passenger to use a credit card (only other options are European credit cards or bank transfers that aren’t possible for US travelers). Next, you are offered a bunch of services that might be useful for some (extra legroom, flexible booking, priority boarding, etc) but not integral to the flight. Then comes the big guns: baggage allowances. Whether I’m traveling for two days or two weeks, at maximum I pack a standard wheelie carry-on and a purse, and avoid checking bags whenever possible. Wizz allows just one piece free, up to 10 kg (22 pounds), and charges 15 to 60 Euros per bag depending if you select the option online, at the airport, or at the gate. Not wishing to be caught with a surprise charge at the airport, I opted to check one bag. Final tally: 117 Bulgarian leva per ticket or $76 USD, booked less than two weeks in advance.

Pre-departure
Haven’t even gotten to the airport and there’s another potential fee: flight check-in. It’s free if you do it online up to 7 days in advance AND print boarding passes, or 10 Euros if you wait until arriving at the airport or can’t find a printer. After entering your passport information and checking in online, your boarding passes are available as web documents or PDFs. I downloaded the PDFs and emailed to my hotel in Varna, who were kind enough to print, but boarding passes via email. Arriving at the airport, they will still check your documents, but my baggage was not scrutinized and I noticed several fellow passengers with more than one bag to carry on, so I may have been able to get away with a purse and a rollerboard.

In-flight experience
Seating on the flight is open, causing the usual every-man-for-himself rush at the gate, but inside the plane, seats are relatively comfy with snazzy purple leather seats. There is an excellent (and free!) in-flight magazine with great destination info and articles that made me want to move to Poland immediately. The Varna to Sofia flight was too short for the full food and beverage “service” (i.e. they didn’t wheel out the cart of stuff you pay for) but the usual drinks and snacks were available for purchase at typically high prices (2.50 Euros for water, 3 Euros for Cup Noodles, which is sort of a great flight food idea). Flight attendants were helpful and cheerful in the signature purple and hot pink colors.

All told, I’d fly Wizz again (especially to Poland), especially if I were near to one of their hubs. Fares are much lower than the competition (Bulgarian Air priced out at 211 leva for the same route) and if you stop looking at fares as inherently all-inclusive, the a la cart structure is actually refreshing and honest. There aren’t many perks and no in-flight movies or tv, but with most flights under 3 hours, you can get by. Airline experiences are all in the seat of the beholder, but with prices this low, a leather seat and free English-language reading material feels more luxe than low-cost.

JetStar to pack planes with iPads

JetStar seems to know that in-flight entertainment is nothing to scream about right now. You watch canned programming from a small screen. Fun. For a low-cost carrier, you’d think that fixing this problem isn’t a priority, but it looks like the little guys are coming up with the best ideas. The airline is getting ready to test the iPad as in-flight entertainment. Access is expected to cost A$10 ($8.40).

Strangely, internet browsing on the iPad will be disabled, because of the airline‘s policy on the use of cell phones and computers while the plane’s in the air.

Look for it to happen later this month. If it works out, the program will be extended through JetStar to the entire network of its parent company, Qantas. The trial will last two weeks and will be limited to domestic flights of less than an hour.