Breaking News! Westjet To Charge Travellers For First Checked Bag

[Croc Dundee]

If WS was on the ball, they would have announced a reduction in their Econo fares to coincide with the bag fee (even a token $5 drop). They could easily increase the fares a month later, or tighten the inventory allocations in the lowest fare, but at least they could defend the spin: those that don't check a bag are currently subsidizing those that choose to check a bag. Shouldn't those people be rewarded with a lower fare?

[deicer]

Here's the Edmonton Journal's take on it. Jeez, not even an eastern paper slapped them that hard.....

http://www.edmontonjournal.com/news/edmonton/Simons+much+corporate+baggage+WestJet+joins+airline/10206236/story.html

EDMONTON - Oh, there was so much optimism.

Everyone hoped the new guy from Calgary would be a breath of fresh air, a change from the tired, old business as usual. There were promises that this brash outsider would shake things up and do things in a different, more populist way.

Instead, we see the Calgarian upstart reverting to the same big bureaucratic way of doing things.

Monday’s announcement wasn’t about fresh and new. It wasn’t about putting people first. It was all about jettisoning excess baggage and catering to existing business elites.

Oh. I’m sorry.

Did you think I was writing about Jim Prentice and his “new” Tory cabinet?

No, no! Sorry for the confusion.

I was actually writing about Monday’s other big news.

The announcement that WestJet is going to start charging $25 to $29.50 a bag, depending on provincial tax rates, for checked luggage on its Canadian and American flights.

The rules don’t apply to everybody, mind you. If you buy a more expensive ticket, your bags still fly free. If you’re a “gold” or “silver” frequent flyer, your bags fly free. And if you have an “elite” WestJet MasterCard, your bags fly free.

But if you’re a regular old “severely normal” Canadian heading off on a family vacation? Well, you’re on the hook, my friend.

It’s a big change, given that up until now, WestJet let everyone check one bag for free, and charged just $20 for a second bag.

Oh, and before I forget, I should mention that the charges for a second or (perish the thought, a third) bag are going up too.

It must be said, most North American airlines are charging for checked luggage these days, just as they now routinely charge passengers for the unique privileges of choosing a seat, or eating that ever-so-delicious airplane food. Soon enough, one imagines, we’ll have to pay extra for a seat that reclines, a belt that buckles or an oxygen mask that descends. So maybe we shouldn’t be so shocked.

Already, analysts are predicting that WestJet’s new rules will make the company an extra $87.5 million in revenues next year. It’s a competitive business, and it probably would be costly for the company to continue to buck an industry trend. Air Canada, industry experts predict, will be following in short order.

But bucking trends, being different, was supposed to be what set WestJet apart. The upstart Calgary-based airline has won devoted customer loyalty, especially here in Alberta, by marketing itself as the populist airline that cares about the little guy. Its brand identity is all about being the fun-loving maverick airline, the one with the cutest viral videos, the one that gives away surprise Christmas presents or helps working parents visit sick kids in hospital.

That’s why Monday’s announcement left such a bitter taste in people’s mouths. It wasn’t just the $25. It was the seeming hypocrisy, the betrayal of WestJet’s carefully cultivated, customer-friendly, jokey image. Adding insult to injury, WestJet had the gall to spin this as a way for customers to save money, by buying “unbundled” service, a la carte.

The upshot won’t just be two-tiered service that disproportionately penalizes those who can least afford to pay. The policy will make flying (even) more cramped and uncomfortable for everyone aboard.

[Guest longtimer]

and from the Calgary Herald

• 16 Sep 2014

• Calgary Herald

• AMANDA STEPHENSON

• CALGARY HERALD

GRUMBLES GREET $25 BAG FEE 14

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Some customers take outrage to social media

WESTJET JOINS MOST OTHER AIRLINES WestJet’s decision to introduce a checked baggage fee for some customers might temporarily cost the airline goodwill, analysts say, but the effect will likely be short-lived.

The Calgary-based airline — known for the intense brand loyalty it inspires among a portion of Canadian air travellers — shocked many of its devotees Monday when it announced it would begin charging a $25 baggage fee to some economy fare passengers. The fee will apply to new Econo fare bookings starting Monday for travel on WestJet and its regional airline Encore as of Oct. 29, and is expected to affect 20 per cent of WestJet customers, or 4.4 million passengers a year.

The reaction on social media was swift and harsh, as travellers slammed WestJet for being “greedy” and for abandoning its low-cost, one-size-fits-all roots. The company spent much of the day on Twitter answering questions and fending off irate customers, one of whom wrote, “Really, @WestJet what happened to you!? You’ve become disgustingly money hungry and have no heart for your customers anymore!”

“What’s the point of @WestJet anymore? Might as well fly @ AirCanada,” wrote another. “Not much of a diff(erence) except AC never claimed to be the people’s airline.”

“In one catastrophic move, WestJet went from a progressive, positive airline to a negative one,” said another Twitter user. “Fire person responsible.”

In an interview with the Herald, WestJet spokesman Robert Palmer acknowledged the negative feedback, but pointed out most U.S. airlines already charge for checked baggage. Here at home, Porter Airlines charges baggage fees for both domestic and transborder flights, and Air Canada charges a checked bag fee for flights to the U.S., though checking a bag is still free for Air Canada’s domestic flights.

Palmer added an “unbundled” user-pay fare structure allows passengers to pick and choose the services they want. He said the extra revenue it brings in (analysts have pegged the figure at between $70 million and $100 million annually) will help WestJet introduce lower sale fares and avoid fare increases.

“The reality is that the airline world has been moving in this direction for several years,” Palmer said. “People want to pay for only the services they need. If I’m a person who rarely checks a bag — if I travel primarily for business, I’m gone for only three or four days at a time, I’m perfectly capable of living out of my roller bag — why would I pay that fee?”

AirTrav Inc. aviation analyst Robert Kokonis said WestJet would have known before making Monday’s announcement that it wouldn’t necessarily play well, especially among “ardent WestJet supporters.” But he said the airline would be foolish to leave that kind of revenue on the table when others are already moving in that direction.

Kokonis also said he expects Air Canada to implement a similar fee, once the dust from WestJet’s move settles.

“It’s a no-brainer. They’re going to look at the competitive environment and say, ‘Porter’s charging a first bag fee, WestJet’s charging a domestic first bag fee, we’re going to join,’” Kokonis said.

WestJet shares jumped Monday at the baggage fee news, hitting an all-time high of $32.88 before closing at $32.58, up 5.8 per cent.

Air Canada shares also climbed, closing up 7.2 per cent at $9.05.

Debi Andrus, assistant professor of marketing at the University of Calgary’s Haskayne School of Business, said she expects WestJet timed the announcement for September to avoid having negative publicity during the busy summer travel period or during the Christmas holiday rush. While travellers may be upset with WestJet now, Andrus said they will likely get used to the new fee over time — especially if every other airline is doing the same thing.

“People are perceiving this as moving away from the core of what WestJet represented,” Andrus said. “I think that could get them into trouble in the short term, but in the long term, people will recover from this.”

WestJet passengers flying to international destinations including Mexico, the Caribbean, Central America and Europe will continue to be able to check a first bag at no charge. So will domestic passengers who have purchased Flex or Plus fares, and WestJet RBC World Elite MasterCard holders. Guests who qualify for the “silver” and “gold” levels in the WestJet Rewards loyalty program will also avoid the fee.

WestJet also announced Monday a new price-drop guarantee, giving guests the opportunity to receive the difference in WestJet dollars if they notice their flight has dropped in price since they booked.

[FA@AC]

Oh, the poor travelling public! How dare any airline impose limits on the amount of stuff that those who pay rock bottom fares can ship with them?

[Jaydee]

[DEFCON]

"AC will match quickly. Can't afford not to with profit margins near the industry bottom"

...or take advantage of the situation by continuing to offer the free first bag to capture the bottom 20% of WJ's traffic that doesn't want to pay the new fee.

[Seeker]

I really, really hope Air Canada doesn't charge the fee and advertises the sh1t out of not doing so - too much to hope for, I guess.

[Thebean]

"AC will match quickly. Can't afford not to with profit margins near the industry bottom"

...or take advantage of the situation by continuing to offer the free first bag to capture the bottom 20% of WJ's traffic that doesn't want to pay the new fee.

Why would a legacy airline with that sort of cost structure chase the bottom 20% of the market that can't afford WJ? That strikes me as part of the problem, not part of a solution.

The financial markets will crucify AC if they don't match, especially in a quarter where the airline traditionally loses heaps of dough. If I were Calin, the box of Cubans for Greg and the WJ exec team would already be in Calgary.

If it isn't matched, WJ will roll it back and it'll be a snowy day in you know where before WJ leads it again.

As bad as the press has been from the entitled "where's my free stuff" crowd, one can only imagine the vitriol had Air Canada led this.

The public is pretty fickle. Whether one personally agrees with the move or not, it will be forgotten in a day or two.

Quick. What was the lead story on yesterday's 6 O'Clock news?

[Guest longtimer]

Friends of mine who I would call "true teal WestJet supporters" are very vocal with their disappointment with the changes that WestJet is going through that make it more and more like AC every day. And no these are not cheap fare Charlies.

[Zan Vetter]

I think the reaction to this demonstrates the fine line between unbundling and nickel-and-diming.

[FA@AC]

I think the reaction to this demonstrates the fine line between unbundling and nickel-and-diming.

There's cost involved in providing a checked baggage service. Asking those who use the service to pay for it isn't nickel-and-diming them in my opinion.

Air travel was usually more pleasant before the LCCs came along and legacy carriers went to "unbundling" of their services to compete, but it was also more expensive. The public wanted cheap seats. They got them. They now need to pay up if they want food on board, want the airline to handle their baggage, or want seats in a specific area of the cabin. I don't see the problem, and I'm amused by all the whining.

[Thebean]

I really, really hope Air Canada doesn't charge the fee and advertises the sh1t out of not doing so - too much to hope for, I guess.

If that was the plan, any half decent agency would have the copy ready and the ads booked for tomorrow's newspapers.

If they do so, WJ will likely roll it back.

Then the investment community will scratch their collective heads as to why an airline that reported a net loss of $118m in the first half of the year and who traditionally lose about $1m a day in the 4th quarter would not avail themselves of the same revenue stream everyone of their peer airline and North American alliance partners, let alone their more profitable domestic competitor, avail themselves of.

To put it mildly, the investment community would be spectacularly unimpressed.

Make no mistake about it, airlines are responsible to their shareholders, not the traveling public.

[CanadaEH]

Friends of mine who I would call "true teal WestJet supporters" are very vocal with their disappointment with the changes that WestJet is going through that make it more and more like AC every day. And no these are not cheap fare Charlies.

They should get informed, then.

[CanadaEH]

I think the reaction to this demonstrates the fine line between unbundling and nickel-and-diming.

I think the reaction to this demonstrates that people want to pay nothing for everything.

[Zan Vetter]

It wasn't more expensive though because people brought more bags. It was more expensive because it was poorly run, over regulated, protected, and airlines weren't subject to open competition. Eliminating/curtailing bag check will have a negligible effect on costs, and I don't disagree that you should pay for what you use, but it is a bit nickel and dimey. As we all know the bags just migrate to the cabin anyway. People travelling thousands of miles usually bring a few things, I think airlines' willful disregard of that reality is disingenuous in the extreme. OH YOU HAVE SUITCASES THAT'S SO RARE, WE MUST DEVELOP A SYSTEM TO HANDLE THIS. NATURALLY THERE WILL BE A FEE. It is a revenue opportunity above all, to pretend otherwise is silly.

[Tango Niner]

Why would a legacy airline with that sort of cost structure chase the bottom 20% of the market that can't afford WJ? That strikes me as part of the problem, not part of a solution.

The financial markets will crucify AC if they don't match, especially in a quarter where the airline traditionally loses heaps of dough. If I were Calin, the box of Cubans for Greg and the WJ exec team would already be in Calgary.

If it isn't matched, WJ will roll it back and it'll be a snowy day in you know where before WJ leads it again.

As bad as the press has been from the entitled "where's my free stuff" crowd, one can only imagine the vitriol had Air Canada led this.

The public is pretty fickle. Whether one personally agrees with the move or not, it will be forgotten in a day or two.

Quick. What was the lead story on yesterday's 6 O'Clock news?

Bean, that's the closest you've come to an indictment of a WJ move that I've ever seen

T9

[FA@AC]

People travelling thousands of miles usually bring a few things, I think airlines' willful disregard of that reality is disingenuous in the extreme. OH YOU HAVE SUITCASES THATS SO RARE. It is a revenue opportunity above all, to pretend otherwise is silly.

Like most North American airlines, WestJet already provides a generous cabin baggage allowance. It's less expensive to carry passengers' baggage in the cabin than to carry it as checked baggage. Perhaps when a passenger purchases a ticket with a slim margin, they shouldn't expect an airline to cover the expense of sending it through an airport's baggage system, transferring it to a different carrier at a connection point and assuming liability if the bag is delivered late. WestJet is now offering the choice of handling your bag in the cabin yourself, covering the cost of checking it, or buying a ticket at a fare level that includes checked baggage. It's only what most airlines are doing.

[J.O.]

Is Southwest charging for bags yet?

[Kip Powick]

Is Southwest charging for bags yet?

Charge only for overweight and oversize baggage....otherwise two bags "free".

[inchman]

This is the third time (at least) since 2005 that we have had the baggage fee discussion. WJ was the first one to do it in 2005, followed within a couple of weeks by AC. Can't remember who canceled it first after that or who started the second round. It is basically the start of a general price increase... add bag fee of $25 that applies to "20%" of the passengers... then remove the bag fee and charge everybody $25 more... repeat. I'm not saying it's a bad thing.... airlines have to get money somewhere... just kind of a backhanded way of increasing fares.

It's the same type of cycle as chocolate bar inflation... the size of chocolate bars gradually decreases, then they increase the size (25% LARGER!!!) and the price... then they start to shrink again.

Ironically, it's the lowest fare passengers/customers/guests (the 20%) that almost always check a bag... they are the grandmas who are going to visit their kids in 6 months and staying for 2 weeks, so they need to check a bag (often stuffed with breakable heirlooms to distribute). The business people paying the higher fare or who have frequent flyer points or the fancy travel credit card are on short trips and are the ones who carry on their bagS anyway.

[Guest longtimer]

They should get informed, then.

They don't like what is happening and your reaction is that is because they are uninformed?? Your reply does not make any sense at all.

[moeman]

Passengers need to be trained not to bring 7 pair of socks, underwear, shirts and pants for a 7 day trip. They don't need 5 pairs of shoes. They don't need to bring their giant cans of hair spray and Costco sized shampoo bottles. They don't need 50 diapers for their baby for the week. There are laundromats and stores where most people are going. Eventually, people will get the hint and bring what they actually need, saving themselves, and us, the hassle of trying to fit it all onboard. If charging people for bags helps to train them to pack properly, I think it's a great idea.

[boestar]

It wasn't more expensive though because people brought more bags. It was more expensive because it was poorly run, over regulated, protected, and airlines weren't subject to open competition. Eliminating/curtailing bag check will have a negligible effect on costs, and I don't disagree that you should pay for what you use, but it is a bit nickel and dimey. As we all know the bags just migrate to the cabin anyway. People travelling thousands of miles usually bring a few things, I think airlines' willful disregard of that reality is disingenuous in the extreme. OH YOU HAVE SUITCASES THAT'S SO RARE, WE MUST DEVELOP A SYSTEM TO HANDLE THIS. NATURALLY THERE WILL BE A FEE. It is a revenue opportunity above all, to pretend otherwise is silly.

It was more expensive because Airlines charged a fare that covered the cost of: Fuel, Pilots, flight attendants, Station Attendants, CSAs, A Meal, Airport Fees, and other things that make for a very long list. Then a little extra to make a profit.

Today the cost of a ticket barely covers the cost to move the person let alone a 44 pound bag.

Look way back in history. the cost of a ticket from YYZ to YVR is virtually unchanged or even cheaper than 40 years ago (dollar for dollar) but the costs have escalated a lot since then. The price of the airfare did not keep pace with the cost of providing the service. So here we are in 2014 with most airlines struggling to make a measly profit.

[Fido]

Actually the cost of providing the transportation has gone down due to technology.

Better wings, better engines etc.

[Seeker]

If that was the plan, any half decent agency would have the copy ready and the ads booked for tomorrow's newspapers.

If they do so, WJ will likely roll it back.

Then the investment community will scratch their collective heads as to why an airline that reported a net loss of $118m in the first half of the year and who traditionally lose about $1m a day in the 4th quarter would not avail themselves of the same revenue stream everyone of their peer airline and North American alliance partners, let alone their more profitable domestic competitor, avail themselves of.

To put it mildly, the investment community would be spectacularly unimpressed.

Make no mistake about it, airlines are responsible to their shareholders, not the traveling public.

Yeah, or maybe they would make more on the selling the extra seats sold to disgruntled WS passengers than they would on the bag fees. Isn't this what Southwest does - brag loud and long about no bag fees and fill the seats?