Pack light or pay up for flights

ATLANTA --- When airlines started charging some passengers $15 or more earlier this year to check their bags, they blamed soaring fuel costs. Since then, oil has plummeted. Yet the industry hasn't stowed away the bag fees.

The reason is airlines are still losing money, though now largely because of the recession.

And don't expect the fee to disappear even when the economy rebounds. Airlines are finding the fees to be a reliable source of revenue and say that such charges allow passengers to choose only the services they want.

For the airlines, the bag fees, on top of charges for other once-free amenities, add up to much-needed revenue. The industry is expected to lose $4 billion for 2008, despite the plunge in oil prices from $147 a barrel in July to around $40 this week, said Calyon Securities airline analyst Ray Neidl.

Airlines now say they are being hurt by the recession, which has caused demand for seats to drop. The International Air Transport Association said global passenger traffic declined 1.3 percent in October from a year earlier.

"While fuel prices have fallen, the economy has created a new uncertainty for us, and the industry's going to lose billions of dollars this year," said Doug Parker, chief of US Airways Group Inc. "Indeed, it was fuel-driven economic concerns, but now we have different economic concerns. And having said that, I, for one at least, believe it's the right model for the business, irrespective of what environment we're in."

Airlines say the fees are a new way of doing business in which services that were once bundled into the price of a ticket are offered a la carte.

An October poll of travelers found that half prefer a lower ticket price for a la carte pricing for food, beverages, headphones and blankets. But the same survey, conducted for IBM, found that 82 percent described the baggage fees as a "rip-off."