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Air Canada Latest to Begin Charging Checked Bag Fees

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Air Canada Latest to Begin Charging Checked Bag Fees

Air Canada Latest to Begin Charging Checked Bag Fees
September 18
11:30 2014

MIAMI — In a widely expected move, Air Canada today became the latest North American carrier to introduce a new fee for checked baggage. Air Canada’s new $25 CAD baggage fee will apply to passengers booking an Economy Class Tango fare on the carrier’s intra-Canadian flights, as well as those to the Caribbean and Mexico. Customers booking into Economy Class Flex and Latitude fares will not be charged the fee. Air Canada frequent flyer Altitude Prestige, Elite and Super Elite, as well as Star Alliance Silver and Gold members will be exempt as well. 

Air Canada began charging a fee for checked bags on all Canada-U.S. transborder flights in 2011, but chose to introduce the fee for additional travelers now to “align its domestic first checked bag policy with other Canadian carriers.”

The airline estimates that the new fee will affect 20% of passengers on domestic flights within Canada, and five percent of its passengers overall. Based on that metric and passenger data through July 2014, the carrier could see revenue of just over $30 million per year from the baggage charge.

Air Canada’s announcement comes days after Canadian low-cost carrier WestJet announced it would begin charging passengers for their first checked bag. WestJet’s move is expected to raise more revenue for the airline as they were not previously charging any customers for the first checked bag.

In the background is U.S. carrier Southwest Airlines, whose CEO Gary Kelly last week said that he “would be surprised,” if the airline wasn’t flying to Canada, “by the end of the decade.” Southwest allows passengers to check two bags for free, stance executives reiterated strongly last week, giving them a marketing advantage over Air Canada and WestJet, should they in fact enter the Canadian market. Southwest argues that the revenue lost from customer deflections outweighs the additional revenue from the bag fees.

As Air Canada was already charging some bag fees and WestJet announcing their change, that calculus didn’t apply to today’s announcement.

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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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