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Continental: New Bag Fee to Generate $100 Million

In case you were wondering how big a difference it makes when airlines add a first checked bag fee, Continental has given us a bit of a clue:  The carrier says that the new fee will generate $100 million in revenue and cost savings (the cost savings come from people not checking as much baggage because they have to pay for it).  They don’t break out how much revenue is generated vs. how much cost is saved, but what’s interesting is that the biggest outcome of the first checked bag fee is probably that most people will only check one bag (rather than two) and that, in general, people will pack less stuff.  Which makes me wonder what the hell I’ve been dragging around in my bags all these years.

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  1. I’m guessing most of the money will from fuel savings. You still need to have the same number of check-in agents, bag weighers and bag handlers as before, although you might be able to shave one or two people off. Also, you could carry paid cargo instead of luggage.

    Continental has about 12 billion in revenue, so $100M is about 1% of their total revenue. I suspect a $2 price hike in tickets could bring in about $100 million as well.

  2. tripso.com | God bless Air Canada — they rescind baggage fees - pingback on September 18, 2008 at 2:44 pm

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