Airlines To Package Fees Into Annual Subscriptions
As add-on fees proliferate, the major carriers are offering deals to lock in customer loyalty.
A new twist on those extra airline fees: They’re being sold as subscriptions. United Airlines is the first to try it, letting travelers buy Premier Baggage. For an annual cost of $249, passengers can check two standard-size bags free whenever they fly. Coverage includes up to eight companions on the same confirmation number. Without a subscription, the cost of checking two bags on United is up to $50 each way, so the program makes sense for anyone who flies several times a year with checked baggage.
Other carriers will soon follow United’s lead. “American Airlines will come on strong with subscriptions early in 2010,” says Kevin Mitchell, chairman of the Business Travel Coalition. They will be targeted to frequent fliers.
Initially, these subscriptions will be for a single service, such as baggage checking, but later on, services may be packaged based on market research and demographics. For example, one package may be targeted with the business traveler in mind, says Mitchell. Such a package could include automatic seat upgrades, priority boarding and expedited security clearance -- all for an annual fee. Lounge access, food and concierge services also could be included as subscription benefits, says Ann Mack, director of trendspotting for advertising agency JWT (formerly known as J. Walter Thompson).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Airlines believe subscriptions will boost revenue and customer loyalty. Anyone who signs up with one carrier will be reluctant to buy a ticket on another and pay the extra fees. “It has the potential to be a win-win for the airlines,” says Mitchell.
The development of these fees into subscription products is driven by their revenue potential, especially given that the industry is still bleeding red ink. Such fees are expected to add $4 billion to the industry’s coffers in the U.S. and $10 billion worldwide. “The airlines are willing to try anything to make a profit. Besides, people are becoming accustomed to paying these fees,” says Mack.
For weekly updates on topics to improve your business decisionmaking, click here.
-
Use An iPhone? You May Be Hearing From A Class-Action Lawsuit Group
A handful of suits against the iPhone maker seek to crack down on everything from app store purchases to messaging.
By Keerthi Vedantam Published
-
Capital One/Discover: What's In Their Wallet For You?
Push back on Capital One's planned merger with Discover is growing with one group of consumer advocates calling for a public hearing.
By Keerthi Vedantam Published
-
When's the Best Time to Buy a Domestic Flight? The Kiplinger Letter
The Kiplinger Letter A new study by CheapAir.com has crunched the numbers.
By Sean Lengell Published
-
Woes Continue for Banking Sector: The Kiplinger Letter
The Kiplinger Letter Regional bank stocks were hammered recently after news of New York Community Bank’s big fourth-quarter loss.
By Rodrigo Sermeño Published
-
Anxious Flyers Take Note: The Kiplinger Letter
The Kiplinger Letter Whether it's the routes to avoid that have the most turbulence or the safest airline, we've got you covered.
By Sean Lengell Published
-
The Auto Industry Outlook for 2024
The Kiplinger Letter Here's what to expect in the auto industry this year. If you’re in the market for a car it won’t be quite as daunting as it was during the pandemic and after.
By David Payne Published
-
Two More Travel Trends for 2024: The Kiplinger Letter
The Kiplinger Letter As the world gets moving again, two more travel trends to consider: Solo cruising and airline passengers with loaded guns.
By Sean Lengell Published
-
Three Travel Trends Will Drive the Industry This Year: The Kiplinger Letter
The Kiplinger Letter New travel trends like set-jetting, destination “dupes” and tour traveling will propel the travel industry in 2024.
By Sean Lengell Published
-
State Economics — Spotlight on New England: The Kiplinger Letter
The Kiplinger Letter After a better-than-expected 2023, New England states will see only modest employment growth in 2024.
By David Payne Published
-
2024's Social Media and Smartphone Trends: The Kiplinger Letter
Video-sharing giant, YouTube, dominates as teens' go-to social media outlet.
By John Miley Published