02 July 2008

Alaska Air's 2nd-bag fee starts July 1

FAIRBANKS - Passengers on Alaska Airlines now face higher fees for a second bag, pets in the cabin and overweight luggage as the carrier tries to make up for higher fuel costs. Travelers who check a second bag will be charged $25 one-way beginning today. The fee does not apply to flights that start and end in Alaska.

Increased fees for pets in the cabin, overweight bags and unaccompanied minors went into effect May 21.

Shipping rates assessed by Alaska Air Cargo are also going up from 18 to 20 cents per pound. A new policy ensures that future prices will rise proportionally to fuel.

Such fees are popping up throughout the airline industry as fuel costs soar.

This summer American Airlines, US Airways and United Airlines will charge $15 for the first checked bag and $25 for a second.

"We are very concerned about the cost of fuel," Alaska Airlines spokesman Paul McElroy said. "It's at a record level."

The company's first-quarter fuel bill was 50 percent higher than a year ago, he said. With 2007 annual revenue at $2.8 billion, Alaska Airlines expects to pay $1.2 billion for 2008's fuel - almost 43 percent of 2007 revenue.

Agent Ramona Oxendine, a partner at Santa's Vagabond Travel in North Pole, said flying is a necessity for most Alaskans, and high prices or more surcharges aren't likely to cancel trips.

Her clients are rethinking how they will spend money at their destinations or increasing vacation budgets.

She warned that passengers should prepare for additional inconveniences like canceled flights, an end to frequent-flier mile awards and fewer connections as airlines look for more ways to control deficits.

Along with fee increases, Alaska Airlines and Horizon Air are making fleet and route changes to trim fuel use. Less-traveled routes are being sacrificed in favor of more flights connecting high-traffic destinations.

In another effort to save money, Alaska Air Group is one of a handful of companies participating in fuel hedging, a practice that is a bit of a gamble but has saved Alaska Airlines about $350 million during the last five years, McElroy said.

"That has been huge in our ability to limit fare increase," he said. The company hedges half its anticipated fuel and buys the rest at market prices. Hedging involves pre-purchasing at a set price and paying a premium for the contract.

The carrier is speeding up plans to replace its older MD-80 planes with more fuel-efficient Boeing 737s. So far, 19 MD-80s have been retired, and the remaining seven will leave service Aug. 25. A single-plane fleet offers savings in training and maintenance costs and simplifies crew scheduling, McElroy said.

Other changes seem minor but add up to savings, he said. Beverage carts are lighter, less potable water is carried on board, and planes are being retrofitted with "winglets" to decrease drag and increase fuel efficiency by about three percent.

On June 17 Alaska Air Group switched from jet fuel to diesel and terminal power to feed pre-conditioned air and electricity into planes waiting at gates in Seattle.

The carrier expects to roll out the same changes this fall in Anchorage, Los Angeles, San Francisco and Portland. Among the five hubs, the airline expects to save 2.4 million gallons of fuel - worth about $5.5 million - a year, McElroy said.


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