News Airline taxes Baggage fees and Security

TSA Tries Using Pre Screening to Make Security Process Faster
Sick of airport security screening process? You´re not alone.

Delta Airlines kiosk check in at the Atlanta Airport.

The aviation industry recognizes that and is trying a variety of short term and long term changes that are designed to make airport security faster and more pleasant. One short-term initiative is the Transportation Security Administration´s PreCheck experiment at four U.S. airports.

Airline customers volunteer information about themselves in the hopes that it will speed their trip through security. Eligible travelers go through a lane with expedited screening. Passengers participating in the program are certain frequent flyers from American Airlines and Delta Air Lines’ frequent flyer programs as well as participants in the Customs and Border Protection Trusted Traveler programs.

The TSA is testing PreCheck at Hartsfield-Jackson Atlanta International, Detroit Metropolitan Wayne County, Dallas/Fort Worth International and Miami International airports. (Source: TSA press release).

Airlines, Consumer Groups Lobby Against New Taxes
Airlines, pilot, flight attendant and other airline unions and consumer groups are fighting proposed tax increases on airlines and their passengers, saying the new taxes will cost jobs.

The first tax would add a $100 departure fee to all flights. The second would double the existing passenger security tax to $5 per one-way trip in 2012, and triple the taxes to $7.50 by 2017. It is currently $2.50 per flight segment per one-way trip, maxing out at $5.

The coalition says that nearly 120 members of the House of Representatives have told congressional leaders that the $100 departure tax would cost airlines $1 billion a year. The coalition has launched a website, www.stopairtaxnow.com. (Source: Air Transport Association press release).

Airline CFOs and Cargo Heads Glum About the Next Year
A monthly survey of airline CFOs and cargo heads, which has been a fairly accurate economic predictor, finds that their expectations for profitability for the next 12 months is down significantly.

It’s down more for cargo, in particular; airlines are seeing sharp drops in this area. However, even though confidence has fallen to levels seen in the first half of 2009, airlines say they are continuing to hire new employees. (Source: International Air Transport Association October Airline Business Confidence Survey).

Airlines Take in $1.5 Billion in Baggage Fees and Reservation Change Fees
Airlines collected $1.5 billion in baggage fees and change fees in the second quarter, according to the Department of Transportation. Airlines took in $887 million in baggage fees and $612 million from reservation change fees. Delta Air Lines topped the list, collecting $392,000 in fees, followed by American Airlines, $249,936 and United Airlines, $164,767. So far, the DOT tracks only baggage and change fees, but it has proposed requiring airlines to report a total of 16 different fees.

Separately, travel technology company Amadeus estimates that airline ancillary revenue will total $32.5 billion worldwide in 2011. It projects that ancillary revenues for major U.S. airlines will increase to $12.5 billion this year from $6.7 billion last year. That is 38 percent of the global total and represents seven airlines: Alaska, American, Continental, Delta, Hawaiian and U.S. Airways.

Amadeus partnered with Ideaworks, a consulting company, on the projections. Ideaworks believes the majority of ancillary revenue for US major airlines comes from selling frequent flier miles. Baggage fees account for 20%.

The rest comes from a la carte items such as selling food and beverages wifi, early boarding and other benefits.  US-based airlines have readily adapted to an a la carte world, but they also benefit from consumers who are keen to get frequent flier miles. (Source: DOT, Amadeus press releases).

Aviation Taxes, Consumer Protection Rules & WiFi

Aeromexico

Aeromexico

Travel Industry Opposes New Aviation Taxes
Both the aviation industry and travel and tourism industries are opposing the President Obama’s plan to impose $3.5 billion annually in new taxes on airlines and their passengers to help pay off the country’s budget deficit. A major bone of contention: an increase in the Aviation Passenger Security Fee.

The proposal would up it to $5 per flight. It had been $2.50 per flight segment, for a maximum of $5 per one-way trip. The fee would then increase by 50 cents each year through 2017, maxing out at $7.50. Fifteen billion dollars of the new taxes would go into the General Fund for debt reduction, with any money beyond that going toward the Transportation Security Administration´s (TSA) discretionary appropriations.

The Air Transport Association says fee increases will force airlines to raise fares or reduce service, which will mean fewer jobs. According to the ATA, federal taxes and fees in the United States account for $61, or 20%, of the cost of a typical $300 domestic round-trip ticket.

The U.S. Travel Association, a travel industry advocacy group, also opposed the tax, saying that any increase in travel fees should be invested directly into the national travel system and infrastructure. The travel industry in general has taken the position that governments are responsible for national security costs, not specific industries. (Source: ATA and USTA press releases).

Airlines Lose Bid to Delay Implementation of New Consumer Protection Rules
Three low-cost carriers lost their legal challenge of new Department of Transportation consumer protection rules scheduled to go into effect Jan. 24.

The U.S. Court of Appeals in the District of Columbia denied Southwest Airlines, Spirit Airines and Allegiant Airlines’ attempt to block a rule that would require them to include all taxes and fees in the fares they advertise instead of breaking them out separately. The airlines say that they differentiate themselves with low fares and want consumers to know how much of what they pay goes to taxes.

Airlines also asked the court to review a ban on raising airline prices after consumers buy their ticket. And they protested the new rule requiring airlines to let consumers cancel a flight without penalty within 24 hours of booking that flight.

Many airlines, already do this; including American Airlines, Continental Airlines, Delta Air Lines, Frontier Airlines and US Airways. But Spirit says that consumers will abuse this and the result will be higher ticket prices. The court denied the airlines´ challenge, saying that they had not met stringent requirements for such as stay. (Source: court documents).

Airlines Lose Bid to Delay Implementation of New Consumer Protection RulesAirlines Lose Bid to Delay Implementation of New Consumer Protection Rules
One in five users of Gogo inflight internet service say that they’ve switched carriers because they´d rather be on flights with inflight internet service, according to a survey of 7,000 Gogo users. Inflight Wifi is particularly important to business travelers, according to Gogo, which provides inflight Wifi to eight airlines. Three airlines have Wifi on their entire domestic fleet: AirTran Airways, Delta Air Lines and Virgin America. Five more have it on select aircraft; they are: Air Canada, Alaska Airlines, American Airlines, United Airlines and US Airways. (Source: Gogo press release).

Pace of Air Travel Growth Starts to Slow
As expected, passenger air travel growth began to slow in August, according to numbers just released by the International Air Traffic Association. Passenger demand was up 4.5%, less than the 6% July increase.

North American carriers reported the weakest performance with growth of just 2.9%, which was partly a result of equally slow growth in capacity. This is a sharp downturn from stronger growth earlier in the year, as reflected in the 5.6% year-to-date demand expansion. However, North American carriers had the highest load factor at 86.1%. (Source: IATA press release).