Loss-ravaged Delta adds checked bag fee for international passengers

by Ned Levi on April 21, 2009

Delta Air Lines released its first quarter financial results today. In Delta’s press release they said,

Despite the worst economic recession in our lifetime, the fundamental strength of Delta’s business allowed us to deliver breakeven results this quarter, excluding fuel hedge losses and special items.

Of course, what that opening doesn’t tell you is that Delta had $684 million in realized fuel hedge losses, and that overall they lost an astounding $794 million, almost $0.8 billion, in just one quarter. You’ve got that right, the bottom line is Delta lost just $206 million short of $1 Billion in just 3 short months.

Buried in Delta’s press release, in the section entitled, “Response to Global Recession” is this statement.

In response to the global recession, Delta is implementing the following initiatives in 2009 to increase revenues …
• Effective today, for international travel beginning July 1, Delta will charge customers a $50 fee to check a second bag, which the company expects to generate more than $100 million annually…

So, effective immediately, Delta is charging $50 for your second checked-in bag for all international travel, for flights on or after July 1st, regardless if you’d already purchased a ticket for flights after July 1st. That’s right, $50 for the second checked-in bag next time you fly outside the US. That fee is double what Delta charges for domestic flights.

International travel from the US is down. Airlines have significantly reduced the number of daily international flight seats. In better times, international flights are big contributors to the airlines’ bottom line.

In these troubled times, is it just me, or do you think this $100 round-trip fee, on passengers taking long trips abroad who need an extra bag, might be driven away to other airlines?

Then, when the global recession recedes, is this new fee going to help Delta compete with the other airlines for the lucrative international traveler?

Does this staggering fee make any sense to you?

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Tagged as: delta, financial results, fuel hedge, recession, second checked-in bag fee

  • http://www.ffocus.org Bruce InCharlotte

    > regardless if you’d already purchased a ticket for flights after July 1st
    I would think this type of charge is not legal, since it was implemented AFTER the ticket was purchased and the terms agreed by both parties.

  • Ned Levi

    Bruce, I suspect, while the fee will go into effect as of July 1st, they will back-track on tickets purchased prior to today, when the fee was announced. If not, they will hear a lot about that.

    When the airlines put in their baggage fees for domestic flights, they all eventually allowed those who purchased tickets before the fees were announced to check-in their luggage under the prior rules.

    Stay tuned. The larger question is which, and how many, of the other airlines flying internationally will also adopt a checked-in luggage fee, and on which bag(s) and how much the fee will be.

  • anonymous

    I hoped NW doesn’t follow suit on the DL 2nd bag fee (100 USD, ouch. doesn’t make any sense)

    I pray other airlines are NOT stupid enough to follow suit on this, because a lot of people won’t be traveling as a result of new 2nd bag fee…

  • Ned Levi

    Delta and Northwest are one company now. I’m sure the Delta announcement refers to the entire company.

  • Frank

    Of course, what that opening doesn’t tell you is that Delta had $684 million in realized fuel hedge losses, and that overall they lost an astounding $794 million.
    =========================================================

    That’s “EIGHT MILLION DOLLARS” per day. All you passengers care to explain how to stop that bleeding WITHOUT adding new fees?

  • http://cigarcruises.net Clay

    I sure am happy that I’m flying in June. Hope I get to keep my “meal”.

  • Ren

    I’m glad I’ve used my Delta miles up! No more Delta.

  • Ned Levi

    Actually Frank, it’s closer to $9M per day.

    I’d have management take pay cuts, put through layoffs, reduce the number of flights to decrease their over capacity, ground inefficient planes, open negotiation with the unions, and look to other cost cutting.

    They didn’t raise fares because that would push passengers to other airlines, but don’t you think international passengers who are going to take a 2nd bag on their flights are smart enough to realize this raises their round trip ticket cost by $100 when they calculate their flight costs?

    Some would argue that when you purchase your international ticket you don’t necessarily realize you’ll be taking an extra bag. Frankly, I don’t believe it.

    If the other airlines follow the Delta lead, and they probably will, this won’t hurt them, but if the other airlines resist this fee, then this will hurt them in my opinion.

  • anonymous

    Frank, I would chuck all the C-Suite benefits, salaries and pensions and let them leave en masse, then install someone similar in skills and temperment to the JAL CEO or promote someone from within stating minimal perks.

    I have a crummy feeling the other US based airlines may follow suit…but the Asian airlines may not…I doubt any airlines won’t feed you on a transoceanic flights, they are asking for trouble if they tried what UA did with their proposal to eliminate Trans-Atlantic meal earlier this year.

    I would be more judicial about my 2nd bag both directions and book away from DL/NW.

  • Bill

    non-US airlines are already a cut above the US airlines. but unfortunately, unless you live in a major metro area, you have to fly a US airline to get to a connecting point to go overseas. that combined with all of these alliances will ensure that this is a new fee that a lot of people will end up paying. it is sad – i flew delta the other day and was really impressed – i thought they had turned things around. but this latest fee is a joke – especially when non-US airlines aren’t even charging for alcohol let alone a second bag fee. way to go delta – you do some good things and then you follow it up with some stupid things….

  • Frank

    On April 21st, 2009 at 7:00 pm Ned Levi said Actually Frank, it’s closer to $9M per day.
    I’d have management take pay cuts, put through layoffs, reduce the number of flights to decrease their over capacity, ground inefficient planes, open negotiation with the unions, and look to other cost cutting.
    =====================================================

    Management paycuts? Ohhh, but we’d lose all that talent. Rolling eyes.
    Over capacity issues have taken place since last year and still continue:

    http://www.flightglobal.com/articles/2009/04/15/325088/parked-fleet-balloons-as-airlines-dump-capacity.html

    Layoffs have been replaced by voluntary furloughs. As well as buyouts.
    Open negotiations with unions? Why, most lost huge in bankruptcies. I know the whole lucky to have a job mantra, but any further reductions would cause alot of airline employees to simply not afford to live on their paycheck. In fact, many are leaving for better paying jobs or finding a second job to supplement their pay.

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