MONEY

Checked-baggage fees win most-hated competition

It’s official: The fee you hate more than all the others in your life is the one for checking your luggage when you take an airplane trip.

Following up on a story in the July issue of MONEY about 15 irritating fees — and how to avoid them — the More Money blog spent the past two weeks asking readers to pick what they thought were the most frustrating surcharges out of all the fees levied by banks, airlines and other companies they do business with. In five initial heats and two semifinal matches, blog visitors voted for their least-favorites among 15 outrageous fees, narrowing down the field to two finalists: Fees charged by credit-card companies to cardholders who don’t charge enough, and charges imposed by airlines on passengers who want to check any baggage.

Well, by the time that the championship-round voting closed Tuesday, 21,719 readers had cast their votes. And the grand-prize winner, so to speak, was checked-baggage fees, beating off a last-minute surge from card inactivity fees to triumph with 52% of the vote. Congratulations, checked-bag fees! You’re the most-hated fees in America!

Now, really, is it any wonder?

In May and June of 2008, when US air carriers debuted fees for checking your first piece of luggage on their flights, they said they were regrettably forced into charging this unfortunate fee because of record-high fuel prices. “The bottom line is that our revenues, which include ticket sales and fees, must keep pace with our increasing costs,” said Gerard Arpey, CEO of American’s parent company, AMR. Both US Airways and United cited fuel costs, too, when they followed American’s lead.

You had to have a little pity for the airlines at the time: After all, the price of a gallon of airline fuel on domestic flights had jumped from $2.04 in May 2007 to $3.19 one year later, according to the Bureau of Transportation Statistics. But what’s happened since then?

Well, fuel prices dropped back down to a low of $1.64 per gallon in March 2009, then worked their way back upward. As of April, the price was $2.31 per gallon, well below summer 2008’s crisis-level pricing.

So now that the crisis has passed, airlines have cut back those checked-bag fees, right?

Of course not, silly! They’ve raised them! And in the first quarter of the year, airlines reaped $768 million in baggage fees, up from $578 million one year earlier and the piddling $123 million they charged in the first quarter of 2008, before this checked-bag adventure began.

Hey — if you want to win a most-hated-fee contest, you can’t just do the obvious.

* * * * *

In further most-hated-fee news, we’re happy to point out that the runner-up in the contest — inactivity fees levied on credit-card holders for not charging enough — has been prohibited by the Federal Reserve as of August 22. Also note that if you’re looking for strategies to avoid a checked-bag fee, we have them.

Finally, if we ever do return to the issue of most-hated fees, we have plenty of up-and-coming contenders. One would be the various surcharges imposed by event-ticket retailer Ticketmaster, which received several reader nominations in the comments section of the final round. The other is the charge of up to $45 that Spirit Airlines will impose, starting in August, on carry-on bags going into an overhead bin. It’s a smart idea to travel light, but this is getting ridiculous.

Follow the More Money blog on Twitter at http://twitter.com/moremoneyblog.

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