Big airlines may levy baggae and check in charges like budget carriers

Global airline giants such as British Airways, the national airline and flag carrier of the United Kingdom and one of the largest in Europe, and Qantas Airways, the national airline of Australia, are likely to join low-cost, rival carriers in charging passengers for baggage check-in and food in the face of exceptionally high prices of aviation fuel. It may be noted that add-on fees for bags and refreshments are a commons feature of low-cost airlines, but long-established airlines have so far refrained from levying  such charges.

John McCulloch, managing partner of Oneworld, one of the world’s biggest airline alliances, was quoted by the website guardian.co.uk as saying: “The group will consider changing membership rules in order to allow budget airline-style charges.

If the industry moves to a standard of charging for an apple juice in economy, the alliance will move in that direction.

On the possibility of levying bag check-in charges, McCulloch said: “Airlines would argue that it’s the right way to do it. It’s £20 a bag, £10 for a meal. We are going to see much more of that.”

(Oneworld, whose members include members include British Airways and Qantas, is the third largest airline alliance in the world after Star Alliance and SkyTeam. Oneworld, based in Vancouver, Canada, was formed in 1999 and was the first airline alliance to establish a central management team.)

Willie Walsh, CEO of British Airways,  had in May 2008 said that carriers would be compelled to raise fares “if they are going to stay in business.” “Airlines,” Walsh had elaborated, “are going to have to find some way of combating this fuel price, whether it’s increasing fares or cutting costs, because the business is unsustainable today. People have realised that it’s going to get more expensive to travel.”

According to analysts, a vast majority of airlines, including British Airways, are technically unprofitable, what with oil trading at $130 a barrel.

Virgin Atlantic, the United Kingdom-based owned by Richard Branson’s Virgin Group and Singapore Airlines, jacked up fuel surcharges recently in an effort to tackle its operating costs.

Air France-KLM, headquartered at Roissy-Charles de Gaulle Airport near Paris, France, had hinted in recent weeks that it would have to increase fares. (Air France-KLM, the largest airline company in the world in terms of total operating revenues, and the third-largest in the world in terms of passenger-kilometres, is a member of the SkyTeam airline alliance.)

However, Oneworld’s managing partner John McCulloch warned at the annual general meeting of the International Air Transport Association in Istanbul: “Prices will have to rise, but consumers might refuse to travel, and plunge carriers into further trouble, if ticket prices rise too far. Fares have to rise to a realistic level to reflect the fuel price. Whether that can happen without the industry breaking up is the key question.”

McCulloch added that 10 member-airlines of Oneworld – which include Cathay Pacific, based in Hong Kong, Spain’s Iberia, and the United States-based American Airlines, the world’s largest carrier – “would have to cooperate more closely on buying fuel.”

Fuel accounts for around a third of airlines’ budgets. That proportion is rising, with the price of jet fuel having risen by 50% since January 2008.