The airline industry operates on extremely low margins. Because so little of the ticket goes to the actual airline, they are extremely sensitive to operational price increases and with fuel costs likely to rise. The public may begin to see increases in fare costs and ancillary services.
This week, JetBlue shook up the industry by charging $30 for the first checked bag. This marks the first carrier that isn’t a low-cost airline to deviate from the industry standard of $25 for the first checked bag.
JetBlue’s move comes as U.S. airlines are seeing profit margins squeezed by higher fuel costs and stagnant airfares. The adjusted pretax margin at JetBlue was 8.2% in the spring quarter, down from 17.7% a year earlier.
Travelers should be reminded that JetBlue’s economy class service offerings, include free WiFi and live television, free snacks and a generous amount of legroom.
By in large, the airline industry has earned the reputation for being a “copy cat industry,” meaning that when one carrier makes a policy or pricing change, the others follow suit. It remains to be seen if the likes of Delta, American, United, and Alaska will follow in the footsteps of JetBlue.
Pro Tip: If your party size if 10+, you can qualify to travel on a group contract which will waive the fee for the first checked bag. You can do so by contacting our team!