Management Accounting Essay Example | Topics and Well Written Essays - 2000 words - 2

Management Accounting - Essay Example Traditionally, Airlines did not charge for the initial two pieces of luggage unless it exceeded the weight limitations imposed by the company. However, in the contemporary environment there is an accelerating trend of charging the customers with baggage fees. American Airline became the first major airline to impose a $15 fee on checked luggage which was soon matched by other companies. United Airlines recently begin charging its passengers $50 to check a second bag. The same policy was adopted by US Airways just after three weeks when United Airlines implemented the policy. Currently, most of the major airlines charge $15 to check one bag, $25 for a second bag and as much as $ 125 for a third bag with only exceptions include Southwest Airlines, JetBlue Airways and Alaska Air Group which allow transporting one bag for free. The baggage-fee frenzy has made many airline passengers wonder: Isnt luggage part of the service you get when you buy a ticket? Customers are astonished that what it actually costs these airlines to fly the 40 pound suitcase. Airlines are cognizant of the negative reactions sparked among the customers due to charges related to baggage fees. The trend has caused great annoyance among the customers but according to government sources these baggage related fees have become a boon for airline industry by saving billions of dollars for these cash deficient airlines. According to the US Department of Transportation, only baggage related fees from the US Airline Industry accounted to $1.15 Billion in year 2008 (Smith, 2009). According to the recent data, the companies in US Airline Industry collected $670 million only in baggage fees in the second quarter of year 2009 which is also a growth of 18.2% from the last quarter. It is estimated that only United Airlines will be able to earn more than $100 million on baggage related fees (CAPA, 2009). There are several reasons behind the math of baggage related fees. Firstly, in the