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Posts with tag BaggageFees

It's official: All the major airlines now charge for bags. But there's a bright side, too

Filed under: Extracurriculars, Transportation, Travel


Those of us who were leaning toward Delta Air Lines because of its policy of allowing a free first checked bag can now abandon any favoritism. As of December 5 (just in time for the holidays!), it will start charging $15 for the first check bag. That figure is pretty much what everyone's charging these days. Only upstarts like JetBlue and Southwest don't.

The news, though, brightens in a few quarters. Simultaneously, Delta has decided to halve its fee for a second bag from $50 to a more sensible $25. Not many of us check two bags, though, so the net effect will still be negative for most casual travelers.

The major American airlines, now that they've got you on the hook for your checked bags, are relenting on their fuel surcharges. Delta and Northwest are eliminating their fuel surcharges. It's about time, too, since it's gotten pretty hard to defend them. The price of oil peaked back in the summer but is now less than half what it was at its peak, and in the past month, it has fallen about $30 a barrel.

United Airlines to customers: Check your bag for $150

Filed under: Budgets, Extracurriculars, Transportation, Travel


When it's backed into a financial corner, what's an airline to do? Gas prices are saner now, but they won't give our money back for the fuel surcharges because now they're using that cash to plug mortal wounds. Americans have grudgingly accepted the implementation of luggage fees, too. As consumers, we've all been led down the primrose path with the airlines, and they're finding that we're actually pretty compliant when it comes to these extra charges.

So why not try out a hefty optional one? United Airlines has partnered with FedEx to sell passengers door-to-door overnight delivery of your luggage. FedEx retrieves your luggage from your house, preferably the day before your flight, and you pick it up the next day at your destination, such as a hotel or at a specified address. The one-way price deviates from the usual FedEx rate scheme: $149 for flights under 1,000 miles and $179 for longer flights. As always, without this splurge fee, your stuff can travel in the cargo hold just below your feet for $15 each way for the first bag and $50 each way for each second bag.

Marketing-wise, I'm not sure what the message is here. With this new optional charge, United seems to be tacitly acknowledging that you might be better off entrusting your valuables to someone else. Is United admitting that paying ten times the usual price is the only way to make sure your bag actually makes it to your destination? Like the cruise lines' efforts to offer premium restaurants on its ships, United seems to be saying that its usual service isn't good enough. And it's not like the lack of a bag will speed your passage through security in any meaningful way, because you can only move through it as quickly as the person in front of you.

Are the airlines' extra fees cheating the U.S. out of tax dollars?

Filed under: Budgets, Debt, Tax, Transportation, Travel, Recession


The airlines might have found a tax loophole, and you're it. The travel consultancy firm T2 recently published a worrisome blog post that is gaining traction. The airlines' extra fees, it says, aren't just costing consumers more. They're also enabling the airlines to dodge tax to our government.

Until a few months ago, checking a bag was considered a service that came with the base fare that you paid when you bought your plane ticket. That was taxed at a rate of 7.5%. But now many airlines are charging up to $50 for each bag each way, and because it's not part of the base fare, that fee isn't subject to tax. T2 says that cash belongs to the airlines, free and clear.

So a carrier like United, T2 writer Timothy O'Neil-Dunne calculates, would be cheating Uncle Sam out of tax income of $7.5 million for each $100 million it makes on extra fees. Given that United recently surmised that it stood to make $700 million on its extra fees, that's a lot of cash that won't be going to our schools, our roads, our veterans programs, and our elaborate Wall Street bailouts. Not only do consumers get screwed by these extra fees, they get screwed out of the greater good of tax revenue.

'Duh!' of the day: United loses $544 million betting on the fuel market

Filed under: Borrowing, Extracurriculars, Transportation, Travel, Recession, Bankruptcy


Hedging fuel costs sounds confusing, but it's nothing new. Some airlines, like the budget model Southwest, have managed to claim a profit in no small part because their masters were clever enough to buy most of its fuel when it was still sensibly priced. That can work out really well if gas prices go up, because those smart airlines will still be paying an older, lower price. Some experts think Southwest has saved $3.5 billion by doing this since the late '90s.

United Airlines, which has a management as sharp as a box of hammers and aging seating about as soft, thought it could imitate Southwest by getting into the hedging game, too. But, whoops! Timing is everything. It got in way too late, as the market prepared to peak. Prices went down. And right now it's paying almost $13 more a barrel than oil is actually worth, which could rack up as much as $544 million in boneheaded, unnecessary losses.

It's a lot like the guy down the street who bought his house a year ago for $400,000, only to find in this self-correcting market that it's now worth about $250,000, which everyone in the neighborhood knew was a more realistic price all along. He intended to flip it, but now he's got to live in it. Of course, if gas prices go back up a bit, United's loss may be mitigated slightly.