Credit Cards


Comments Closed

Travel notes / Reward credit cards help airlines waive bag fees

Dont feel sorry for airlines yet.

Airlines made 4 percent less on baggage fees in 2013 than the previous year, according to federal statistics released last week.

That sounds like great news for consumers, but its only part of the story. Airlines have been waiving bag fees as an incentive to get travelers to sign up for fee-generating airline loyalty reward credit cards.

Over the past few years, United, American, Delta, US Airways, Virgin America and Hawaiian Airlines have all promoted airline loyalty reward cards that let fliers check one bag for free.

For example, American Airlines in 2012 introduced a Citi Platinum Select card that waived bag fees.

Bag revenue collected by American Airlines dropped 9 percent from $557 million in 2012 to $506 million in 2013, according to the US Bureau of Transportation Statistics. Airlines are not required to disclose revenue from loyalty reward programs, and American declined to say to what extent credit card fees made up the difference.

Another cause for the drop could be that travelers are packing fewer bags to avoid the fees, but some industry experts say the push for credit cards with bag-fee waivers is playing a big role in the decline.

Carriers are most likely collecting enough revenue from their credit cards to make up for the loss of the waived bag fees, these experts say.

They are earning revenue in many ways, said Brian Karimzad, director of the reward card comparison website MileCards. They get a cut of the annual fees and a cut of what you spend on those cards.

Jay Sorensen, president of IdeaWorks, a Wisconsin consulting company for the airline industry, agrees that airlines are probably not losing money over the credit card fee-waiving tactic.

Airlines dont do anything unless they come out ahead, he said. The airlines are generating equal, if not more, revenue from banks.

Learn to love Spirit

Spirit Airlines, the carrier with the nations highest passenger complaint rate, believes its just misunderstood.

Maybe passengers will learn to love Spirit if they understand that the Florida airline charges fees for carry-on bags, food, drinks and about 70 other extras simply to keep base fares low.

That is the thinking behind a campaign the airline launched this month. As part of the effort, Spirit secured a trademark for the term Bare Fare, as in a fare stripped of all extra costs.

Spirit has also produced two videos, one of a young man and the other of a young woman stripping down to their underwear to fill a carry-on with the clothes they need for a quick trip.

Although other airlines include the cost of snacks and reclining seats in base fares, Spirit says its focus is only on getting you from point A to point B with no extras.

We know that can be a surprise if you are used to other airlines that offer bundled fares, charging higher total prices including stuff you may not even use, said Ben Baldanza, chief executive of Spirit. We know some people say they hate Spirit. We are going to hug the haters.

Dress to impress

With the average salary of a US flight attendant about $37,000 a year, you wouldnt expect to see them wearing the kind of designer clothes worn by Hollywoods A-list celebrities.

Guess again. Last year, American Airlines introduced new crew uniforms created by a pair of designers who have dressed celebrities such as Beyonce, Taylor Swift, Halle Berry and Jennifer Aniston.

Now Tokyos All Nippon Airways is unveiling uniforms designed by New Yorks Prabal Gurung, whose clothing has been worn by Michelle Obama, Lady Gaga, Oprah Winfrey and Jennifer Lawrence.

The uniforms feature light gray jackets and charcoal pants and skirts.

Comments are closed.