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No more extra bag charge on Air Canada flights

by yuls.source | September 18, 2008 at 09:25 am | 37 views | add comment | 0 recommendations

While stock markets are feverish and oil prices are tumbling, a Canadian consumer is in a situation to win. Air Canada is dropping its $25 extra bag fee, which it has introduced back in April to counteract soaring fuel prices. Now with the price of oil at 60% of what it used to be back in April, Air Canada figured there is no need to overwhelm its customers with extra fees. Its major competitor WestJet never introduced a second luggage piece fee to begin with.

On the other side of the border, American airlines are not in a rush to ditch their fuel price imposed extra fees.

While some airlines have reduced the fuel surcharges they place on cargo shipments, passengers have yet to see any relief. Airlines say fuel prices remain volatile and still remain significantly higher than just a year ago.

So far, baggage fees and other charges are significantly improving the usually dismal finances of the industry. Passengers are paying them, if begrudgingly, and aren’t shifting in large numbers to the few airlines that don’t charge fees like Southwest Airlines Co. Continental Airlines Inc. joined the fee fray last week with a $15 charge to check a first piece of luggage, and United was emboldened this week to raise its fees, even as oil prices fall. Continental said it will generate $100 million annually from that fee alone. United said all of its add-on fees could total $700 million next year.

Given their thin profit margins, shifting back to the original "no extra fee" way of business will be challenging for many airlines. Especially, when consumers do not seem to mind paying extra anymore.