Strategy

Despite Lower Oil Prices, Airlines Add Fees

Northwest charges $80 a ticket for fuel, Delta makes the cost of baggage heavier, and USAirways starts charging for a drink.
Stephen TaubAugust 1, 2008

Although the price of a barrel of oil may be down about $25 from its high of a few weeks ago, airlines and other companies are still citing the rising cost of energy as they hike nuisance fees.

On Thursday, for example, Northwest Airlines Corp. said it would add fuel surcharges of up to $80 for many domestic round-trip tickets, according to the Associated Press. Northwest said the surcharge would apply to fewer than two-thirds of its city pairs, about 7,000 pairs, beginning January 10. The airline told the wire service it is matching surcharges added by competitors in those markets.

Earlier in the week, Delta Air Lines announced increases in some of its domestic and international baggage fees, citing a 70 percent to 80 percent increase in jet-fuel prices in the past year. It will double the fee to check a second bag for domestic travel to $50. Fees for specialty items that require special handling, such as surfboards or bicycle equipment, will also increase on domestic and international flights.

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First Class, BusinessElite, and Medallion customers will continue to be able to check up to three bags at no charge. Customers checking bags on international flights may continue to check a first and second bag at no charge.

Delta reported that the charges will apply to customers who buy a ticket on or after July 31 for travel on or after August 5. “As fuel costs remain at record levels, Delta believes revising the fee structure for excess bags and specialty items is essential to generate the necessary revenues to offset record fuel costs while continuing to offer these services to customers,” the airline said in a press release. It did not say to what price oil had to drop to for the airline to reduce or eliminate the fuel surcharges.

Meanwhile, on Friday USAirways will become the first airline to charge for soft drinks. A soda or other nonalcoholic beverage will set customers back by $2, while alcoholic beverages will cost $7.

Further, Matson Navigation Co., Hawaii’s largest ocean cargo carrier, has announced it is raising the fuel surcharge for its Hawaii service by four percentage points, to 42.25 percent, to offset rising fuel costs, according to The Honolulu Advertiser. The paper said the move follows a similar announcement by Matson’s competitor, Horizon Lines LLC.