Airlines pass higher fuel costs to passengers

Just in time for summer travel, airlines are getting socked with billions of dollars in higher fuel prices - and passengers will see all kinds of fees added to the cost of flying.

A day after American Airlines said it would begin charging $15 for the first bag checked starting June 15, US Airways Group Inc. and several other airlines said they were considering following suit to cope with skyrocketing fuel prices.

Costly fuel also compelled US Airways, the region's dominant airline, which carries two-thirds of passengers at Philadelphia International Airport, to announce it would delay its long-sought flights between Philadelphia and China.

The carrier said it had asked the U.S. Transportation Department for an extension, from spring 2009 to 2010, to launch Philadelphia-Beijing service.

Government regulators already have granted United Airlines a delay in starting its service to China, and Northwest Airlines Corp. has filed a similar request to suspend some cargo flights to China.

Fuel for the Philadelphia-Beijing route would cost $90 million a year at today's prices - $40 million more than estimates, US Airways said. "We're hopeful that economic conditions will improve by late 2009 or early 2010 to make this route more economically practical," US Airways said in a statement.

With oil topping $135 a barrel, the extra fuel costs make the China route "uneconomic" especially if the economy and travel soften, US Airways president Scott Kirby said. US Airways said it was committed and "on track" to increase international flights between 2009 and 2011 from Philadelphia. The airline also said it was "proactively reaching out" to Philadelphia and Pennsylvania officials to explain the delay.

JPMorgan Chase & Co. analyst Mark Streeter, in a note to clients, said: "Welcome to the airline crisis of 2008."

The financial pressures of oil are "every bit as severe" for airlines as fear of travel was after the Sept. 11, 2001, attacks. If airlines do not drastically cut capacity - flights - and increase fares, Streeter said, "multiple" carriers will be forced into bankruptcy.

Meanwhile, airlines are scrambling to raise money. American announced Wednesday that it would charge $15 each way for a single suitcase. Yesterday, US Airways and United, along with some other carriers, said they were considering similar moves.

United Airlines spokeswoman Robin Urbanski said United was "seriously studying" matching American's fee to check the first bag each way, or $30 round-trip, for those flying on a discounted fare. Baggage fees will lead to passengers' attempting to bring more luggage on board to cram into overhead storage bins. The result could be flight delays, longer security lines, and boarding headaches.

Among travelers yesterday, the prospect of a baggage fee evoked consternation and resignation over costs. "I think it's a bad idea," said Ron Allen, 24, a salesman, waiting in Philadelphia for his flight to Atlanta. "But we can't do anything about it - the gas is rising and that affects everything."

Southwest Airlines Co., the No. 2 airline in Philadelphia, with 12 percent of the customers, said it would not charge to check a first or second bag.

"In January, we just started charging for the third checked bag, so we don't have plans to change the two-free-bag allowance," said Brandy King, a Southwest spokeswoman.

Instead, Southwest will boost revenue by charging for new items, such as allowing passengers for a $10 to $15 extra fee to board first and also get a drink. Southwest does not have assigned seating.

Southwest has hedged fuel prices because it bought oil when prices were lower. "For 70 percent of our fuel, we are paying $51 a barrel this year," King said. "For 30 percent, we are paying full price."

Rick Seaney, chief executive officer of the airfare-research site

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, said United and US Airways likely would be first to match American's fee to check one bag. "I wouldn't be surprised to see Continental hop in second, because they tend to follow American," Seaney said. "The last to do it would be Northwest and Delta," which have proposed a merger.

United was the first to charge passengers $25 for a second checked bag. US Airways and other airlines followed.

But tacking extra fees onto customers will not remedy the problem. Analysts said airlines must make deep cuts in flight schedules and hefty increases in fares. "Airlines can only do two things at this point: raise airfares and fees and cut back capacity," Seaney said. "And hunker down and hope for oil to go south of $100 a barrel. Right now, literally, for airlines it's survival mode."

Some people who must fly, or who still love to fly, were undeterred. "Of course we don't like to hear that fees go up, but they must pay for the rising price of the fuel, so I understand," said Mary Mills, 54, a nanny from Oostburg, Wis. "I love flying, and it's not going to stop me from flying - it's still better for me than taking the car."