No More Fees, Please!

The business travel press has been buzzing lately about Northwest and American airlines' decision to encourage consumers to purchase tickets on the Web. The tactic of choice is charging $5 if you buy a ticket from them over the phone and $10 if you buy a ticket at the airport.

Business travelers are outraged! Given that these fees are not a significant cost of the total ticket price and significantly less than the recent drop in business travel ticket prices, this reaction is more emotional than practical. Perhaps it is a long history of highly opportunistic pricing on the part of airlines that gets business travelers in a knot.

In the standard practice of using the press as chess board, Northwest had announced a week or so ago that it would also charge travel agents and Web sites that use computerized reservation systems a pass-along charge also. Since American didn't announce a similar step, Northwest has dropped the charge. Their next moves were to match each other in announcing that the most elite frequent flyers would not be charged the fee. As usual, airline public price setting is great fodder for economics professors teaching the game theory of oligopolies, a concept best understood through the schizophrenics of its originator, John Nash, and our very own domestic airline industry.

Surprisingly, fees for changing or canceling your ticket, flying standby, and for excess or oversized baggage, which can be significant percentage of your ticket prices, are for the most part ignored or at least cause little outrage.

Cancellation/Change Fees

Airlines charge a change fee if you want to change your restricted-fare itinerary. These change fees are in addition to any difference between the cost of the original ticket and the cost of the new fare. Change fees can be as low as zero or as high as $100, as shown in the following table:

Same-Day Standby

Because most airlines allow you to fly standby at no additional cost, the advantage of flying standby instead of changing your reservation is that if you have purchased a restricted fare, you can avoid the change fee -- and any applicable fare increase. However, there are exceptions. Delta charges a $25 fee to fly standby, but you get a confirmed seat. (And, yes, a confirmed standby seat is an oxymoron.) US Airways requires you to purchase a $25 standby coupon, whereas Southwest Airlines requires you to upgrade to the unrestricted fare.

Excess or oversized Baggage Fees

Every airline has a free baggage allowance, which is the maximum number and size of bags you can carry on or check in without additional charge. Depending on the airline, the free baggage allowance permits 2-3 checked bags that weigh less than 70 pounds each and do not exceed 62 linear inches. Continental, Delta, Northwest, and United charge for bags weighing greater than 50 pounds.

Excess and oversized baggage fees are charged if you exceed the free baggage allowance. These fees run anywhere from $40-$80 for the first additional bag. Although, most airlines will allow you to take one sporting goods item, such as skis or golf clubs, for no additional fee.