United’s Annual Bag Fee is a Smart Move

Earlier this week, United announced that it would stop charging you fees for your first and second bags . . . if you’re willing to pay $249 up front. Is it a good deal for fliers? Maybe in some cases, but it’s really only some families that will be able to benefit.

This program says that if you pay $249 (as an “intro” rate), then you can take 2 bags with you without any additional charge United New Premier Bag Optionfor a year. What’s more, you can bring up to 8 companions with you and they get the same royal treatment.

Your initial thought is probably that if you fly a lot, this makes sense. But if you fly a lot, this makes the least sense of all. Huh? Remember, if you’re an elite member, then you never pay for the first and second bags. So if you’re a single traveler and you check enough bags to make this worthwhile, you’re probably already an elite flier, especially with all these bonus elite mile specials that are out there.

What if you have a family of 8 and everyone wants to check two bags? Well, this is a great deal. That first bag is normally $15 in advance and the second is $25. So, $40 times 8 people = $320. You’ve already made your money back before you even take the return flight.

But those are rare scenarios (except in Utah). The reality lies somewhere in the middle. And that is why I think this is a great idea from United’s perspective.

Let’s say that you have a husband, 2 kids and you travel 3 times a year. Generally when you travel, you’ll check 3 bags. That means you’ll pay $270 to check bags on those three trips, so you might just decide to pay up front and spend the extra $20 on an overpriced snack box.

Here’s where it gets interesting. If you don’t fly that often, you may not have loyalty with any airline. In fact, you’re probably just making your decision based on price. If you buy this baggage option, however, then United has hooked you. Even if they cost more than other carriers for your second and third flight, you might take them simply because you already have “free” bags. It’s a great psychological move in that it secretly builds a level of loyalty in a group that is usually far from loyal.

Will they sell a lot of this? Probably not. But every time they sell it, they’re helping to build loyalty.


19 Responses to United’s Annual Bag Fee is a Smart Move

  1. David SFeastbay says:

    Those companions must all be booked in the same record (one comfirmation number) as you which also makes a difference.

    Sometimes one person may be traveling on business and the spouse and kids may join along but not travel at the same time/days. So if the ‘business’ traveler of the group paid the yearly fee, they can’t use the companion option since the rest of the group is booked in a different reservation. Same for multiple business travelers traveling at the same time and checking bags. If one paid for the year the others are out of luck if they are not in the same booking record. UA was smart to add that one rule which a lot of people may not understand.

    But you are right they do have you hooked if you don’t travel a lot or don’t always check bags. You will use them to get your baggage fee monies worth over traveling another carrier. And you know us humans, if we have a couple of weeks before the year is up, we’ll buy a ticket somewhere just to get our monies worth…..lol

  2. asad says:

    There is a term in marketing for this type of plan I don’t remember what it is but it’s not loyalty. Locked in ? This is more like microsfot making sure you can only use exchange to manage calendaring, it’s a lock in and users generally hate it because they are forced to choose something simply because they need 1-2 options. this option also bets on users not realizing that they will be hooked. So far it appears as yet another money making scheme by United.

    United has a lot of good people, but ultimately they are a yield management company. They are so focused on getting every last penny out of every possible passengers that they have completely abandoned building up the flying experience itself or building the united brand into something they could use in other areas.

  3. CF says:

    asad wrote:

    There is a term in marketing for this type of plan I don’t remember what it is but it’s not loyalty. Locked in ? This is more like microsfot making sure you can only use exchange to manage calendaring, it’s a lock in and users generally hate it because they are forced to choose something simply because they need 1-2 options. this option also bets on users not realizing that they will be hooked.

    I don’t follow your comparison. United is not forcing anyone to buy this. It’s just another option. So people who do buy it will then be loyal to United for the rest of the year because they already have that sunk cost. (You should never consider sunk costs in a situation like this, but people do.)

  4. CF wrote:

    I don’t follow your comparison. United is not forcing anyone to buy this. It’s just another option. So people who do buy it will then be loyal to United for the rest of the year because they already have that sunk cost. (You should never consider sunk costs in a situation like this, but people do.)

    Its a minor way of adding lockin from what I see. Basically moving to another option costs more.

    Although Delta won’t do this, that whole SLC problem would kill them if they did..

    I’ll give kudos for United for trying some thing new, but I honestly don’t know how much they’ll get out of this.

  5. William Blewett says:

    Does United’s Bag Fee apply to partner Alliances?

  6. JayB says:

    Now let’s see, I’ll take one each:

    Priority Baggage,
    Priority Line,
    Premier Travel,
    Premier Travel Plus,
    Economy Plus Annual Option,
    Economy Plus, with Premier Fast Track,
    Economy Plus, with Red Carpet Club.

    And of course, one “Low Fare Guarantee.” Now was that “file by” midnight Central Time, or was it Eastern Time…? And the forms needed?

    Did I forget an “option?” Have to hire someone like Cranky, at a reasonable fee/charge, just to keep all this straight.

    True, I don’t have to buy any of this, but it would be awfully nice for me if UA would put as much effort/PR into the simple reason I would like to use the company, that is to obtain a simple, safe, efficient, and reasonably-priced “travel experience,” as they seem to do with yet one more “option” I could do without.

  7. CF says:

    William Blewett wrote:

    Does United’s Bag Fee apply to partner Alliances?

    Nope.

    JayB wrote:

    True, I don’t have to buy any of this, but it would be awfully nice for me if UA would put as much effort/PR into the simple reason I would like to use the company, that is to obtain a simple, safe, efficient, and reasonably-priced “travel experience,” as they seem to do with yet one more “option” I could do without.

    I certainly agree. I guess I should have qualified my statement about this being a good idea. It’s a good idea in the context of what’s happening in the industry today.

  8. David SFeastbay says:

    Be careful if you buy this or you could be buying it yearly if you don’t
    op-out of the automatic renewal.

    From united.com

    Term and Automatic Renewals: The term of your subscription is based on the initial activation date and on your acceptance of the terms and conditions. Except for gift subscriptions, near the end of the subscription period your subscription will automatically renew for the renewal term and your credit card on file will be charged the cost of the subscription listed on united.com at the time of renewal, unless you have opted out of the auto-renewal feature.

    This pratice with companys should be against the law. Nothing should be an automatic renewal unless you ‘click’ (or whatever) to chose it to be. To many company’s do this for things and the consumer never knows until they have been billed for the renewal. You read this stuff all the time and how hard it can be to stop the auto renewal and get your money back.

  9. Thomas says:

    Anyone else remember those good old days when you bought a ticket, and that ticket included the fuel needed for the plane, the suitcase in the cargo hold, stuff to keep you alive while traveling, and whatever the airport asked for manning the metal detector?

    Now, buying a ticket means that one voluntarily bends over to also pay “fuel surcharges”, “security fee” and “baggage fee” and the old friend “airport tax” — let alone have to beg, and pay through ones nose, for a glass of water.

    So United comes out with a “get shafted up front” subscription for paying the “baggage-fee”, and it’s being hailed as POSITIVE?

    Give me back an airline company which advertises the ticket fare INCLUSIVE of all those things that are “mandatory” anyways.

  10. Bobber says:

    Thomas wrote:

    Give me back an airline company which advertises the ticket fare INCLUSIVE of all those things that are “mandatory” anyways.

    Speaking of which, I am rather disappointed to see the UA website in the UK is now giving prominence to air fares pre taxes and fees – very misleading and f-ing irritating.

  11. CF says:

    Thomas wrote:

    Give me back an airline company which advertises the ticket fare INCLUSIVE of all those things that are “mandatory” anyways.

    I agree with you . . . except I don’t see a bag fee as mandatory. I never check bags when I fly. Now if they started charging you to check-in like Ryanair . . .

    Bobber wrote:

    Speaking of which, I am rather disappointed to see the UA website in the UK is now giving prominence to air fares pre taxes and fees – very misleading and f-ing irritating.

    It’s not just the UK, Bobber. It’s here in the US as well, and I agree that it’s awful.

  12. Matthew says:

    Cranky, is this for a calendar year, or 365 days?

  13. CF says:

    Matthew wrote:

    Cranky, is this for a calendar year, or 365 days?

    It’s not calendar year – it’s one year from the date of purchase.

  14. Oliver says:

    @ CF:

    hmm, when UA switched to tax-exclusive pricing in the US a few weeks ago, their UK website still showed the all-inclusive pricing, and the assumption on FT was that this was due to stricter EU regulations.

  15. MeanMeosh says:

    Thomas wrote:

    So United comes out with a “get shafted up front” subscription for paying the “baggage-fee”, and it’s being hailed as POSITIVE?

    Hey, I totally agree with you, but let’s face it, in the NWO we live in today, we’re not going back to the days of old, without the nickel-and-dime fees. Given that, I’ll take anything that eases the shafting even a little as a positive.

    asad wrote:

    There is a term in marketing for this type of plan I don’t remember what it is but it’s not loyalty. Locked in ? This is more like microsfot making sure you can only use exchange to manage calendaring, it’s a lock in and users generally hate it because they are forced to choose something simply because they need 1-2 options. this option also bets on users not realizing that they will be hooked. So far it appears as yet another money making scheme by United.

    I guess you can use “loyalty”, “locked in”, or any other term of art you choose, but that’s exaclty the point – UA is trying to get people hooked on to their product. I don’t necessarily see the prepaid annual bag fees as any different from frequent flier programs. I’ll admit it, I always look to AA as my first choice, even if it isn’t the cheapest or most direct option, because I want to get those miles to keep my status. Or, how many people will go to grocery store A to collect their reward points for that $5 gas rebate, never mind that the total bill would have been $15 lower at grocery store B? UA might not get a ton of benefit from this, but I’ll give them credit for trying something new (and if they convince even a few people to give UA a try, it’s money in the bank they didn’t have before).

  16. JayB says:

    Oliver wrote:

    @ CF:
    hmm, when UA switched to tax-exclusive pricing in the US a few weeks ago, their UK website still showed the all-inclusive pricing, and the assumption on FT was that this was due to stricter EU regulations.

    I’ve been watching this with great interest. I’ve contacted UA to question what they are trying to do with their recent changes. I said it is very difficult to see what they are charging because without a hard-copy ticket, a traveler really has no idea what is being charged–fare vs. taxes/fees. Not that it was ever that easy trying to read the codes, etc. on the old tickets, but now with the e-tickets there really isn’t much of anything to examime or audit. I’m not asking for a hard-copy, only that they disclose, opening and fully, what they are charging, when I print out an e-ticket receipt. The current “summary” data is just that, “summary.”

    Of course, their website booking tool recent changes. to me, seems only to have made matters worse. It takes an additional step in the booking process to get a “priced-out” ticket, even when they have already established an itinerary that can be priced-out.. And then, when you buy a ticket, UA is not accurately breaking down what is “fare” and what are the “govenmental-imposed taxes/fees.” How much of the price is related specifically to each: the fare, the 7.5% federal exise tax, the flight segment taxes, the Sept. 11th security fee, and the PFCs for each applicable airport.

    Not satisfied with UA’s response, I wrote to DOT, questioning whether or not UA is complying with DOT’s 8-25-09 Consent Order [Order 2009-8-17] on these very matters. To me, UA is not complying with the Order, and its actions indicate it is only trying to see what they get away with. To be clear, I’m not a lawyer, and I’m only stating an opinion, which I asked DOT to evaluate.

  17. Bobber says:

    CF wrote:

    It’s not just the UK, Bobber. It’s here in the US as well, and I agree that it’s awful.

    Just complained to them, Cranky, and to their credit I got a personalised response in under 24 hours. Crap answer, though. They’ve switched to displaying fares in this manner because ‘other carriers are doing the same thing’.

  18. Thomas says:

    @ CF:

    Perhaps you don’t check bags in – more power to you. Fact is: it used to be inclusive of the ticket-fare, now it’s not (and fares haven’t gone down, at least not where I fly). Hence, we’re simply getting shafted.

    From where I stand, I see it just as extra hassle, especially for my less-traveled colleagues who just have extra “explanations to the accounting dept who think they’ve paid for the travel expenses in advance” and who doesn’t understand what to do with the extra claims, often with receipts of various quality etc, extra hassle to deal with in the airport — and so forth.

    Hey, my neighbor has a car in his garden, with no wheels on. He never drives his car, so he doesn’t need wheels. Therefore, all cars should be sold without wheels such that those who don’t need wheels won’t have to pay for them.

    Right?

  19. CF says:

    Thomas wrote:

    Fact is: it used to be inclusive of the ticket-fare, now it’s not (and fares haven’t gone down, at least not where I fly). Hence, we’re simply getting shafted.

    Just because it used to be included doesn’t mean that’s the right way to do it. Fares have dropped dramatically over time – take a look at inflation adjusted fares 20 years ago. The reality is that some people want to check bags and others don’t. I don’t see why people shouldn’t have to pay extra for something that certainly isn’t mandatory.

    Now, what I do want is a booking process that lets you see fares including baggage fees and other fees so that you can make a good decision. Then you should be able to pay for it all at once when you buy the ticket. That’s the thing that bothers me the most.

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