Delta decides to charge more to check a second bag to cut losses

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Delta decides to charge more to check a second bag to cut losses

April 21, 2009 – 9:38 pm – No Comment

Delta Airlines has just chosen the most inefficient way to cut costs imaginable, to raise the fee on the “second checked bag.”

In an attempt to generate some $100 million in annual revenue, Delta (NYSE: DAL) said it will charge customers a $50 fee to check a second bag on international flights starting July 1. The so-called “unbundling” of services, which includes baggage fees, has been a strong source of revenue for the carrier. So-called “other” net revenue grew 18 percent, or $137 million, largely from baggage fees.

The 747-200 freighters were acquired through the carrier’s merger with Northwest Airlines Corp. Company officials said the planes would likely be sold.

The airline reported a net loss of $794 million and a loss per share of 96 cents, compared with a loss of $6.4 billion and a loss per share of $16.15 in the first quarter of 2008. It is the sixth consecutive quarterly loss for Delta.

Delta’s performance beat analysts’ expectations of about a $1 per share loss.

As another cost cutting measure, Delta plans to ground 50 jets, which includes its entire fleet of 14 Boeing 747-200 freighter aircraft beginning December 31, 2009 due to inefficiency. It will also be grounding 30 Bombardier CRJ aircraft and several “less efficient” Boeing 757 and MD-88.

The grounding of these aircraft is not the problem I have with what is going on at Delta, it is the fact that the company feels the need to charge the consumer more and more for a service they received yesterday at a cheaper price that bothers me.

Hey Delta, take a page from Southwest and perhaps you’ll end up actually turning a profit.