Flying to Europe gets more expensive for Canadians as Delta adds baggage fee

MONTREAL — Travelling overseas will get a little more costly for some Canadian travellers after Delta Air Lines announced it will begin to charge for checked bags on flights to Europe and North Africa.

The Atlanta-based airline said it will charge basic economy passengers US$60 or C$75 for the first bag and more for second bags.

The fees will apply to tickets purchased after Dec. 6 and for flights after April 10 originating from the U.S. and Canada.

There is no change in policy for more expensive international flight tickets or for flights to other regions. Delta is currently expanding its Basic Economy flights for overseas travellers.

Like other carriers, Delta currently doesn’t charge for checked bags for international flights and charges US$25 for the first checked bag on domestic and transborder flights.

Airline analyst Robert Kokonis of AirTrav Inc. says he expects Air Canada and WestJet Airlines should and will follow, although the fee will likely only apply to the lowest economy fares and those without frequent flyer status.

“Our carriers likely will not want to ‘leave this money on the table’ if one of their competitors has introduced the fee,” he wrote in an email.

Kokonis has argued that so-called unbundling of fares that allows passengers to pay for services they use had to happen, because the old model of including everything in a fare no longer worked in the cause of low-cost competition.

A report this week said global ancillary fees are expected to generate US$82.2 billion this year, a 22 per cent increase in one year, compared to US$22.6 billion in 2010.

Air Canada (TSX:AC) ranked 10th in the world in collecting ancillary fees, bringing in US$1.179 billion in 2016, according to IdeaWorksCompany, a U.S. research company that tracks airline revenue.

That equalled US$26.29 per passenger. WestJet collected US$302.2 million or US$13.77 per passenger in fees last year.

Although WestJet (TSX:WJA) has plans to create a joint venture with Delta for transborder flights in 2019, the airline isn’t prepared to adjust its baggage fees.

“At this time, WestJet has no plans to change our fees,” spokeswoman Lauren Stewart wrote in an email.

Air Canada (TSX:AC) said it hasn’t made adjustments in fees but “monitors competition to ensure we remain competitive.”

Air Transat said it has no plans to increase fees.

In addition to unveiling its tie-up with Delta, Calgary-based WestJet is looking to expand its reach by appealing to discount, premium business and international segments.

It is preparing to launch ultra low cost carrier Swoop in June, with low fares partially offset by ancillary fees for everything from checked bags to preferred seats, food and other services.

WestJet is also building its business customers and international reach by adding new Boeing 737 Max planes and also introducing 787 Dreamliners in 2019.

Moody’s Investors Service said the Delta union will put WestJet in a stronger position to gain market share in the cross-border market.

Air Canada leads with a 45 per cent share of the market based on available seat miles, followed by WestJet at 21 per cent.

United Airlines had 12 per cent share, American Airlines nine per cent, Delta seven per cent and other carriers including Porter Airlines six per cent.

“The joint venture will also place WestJet in an improved position to compete in the transborder market against Air Canada who has a codeshare partnership with United Airlines,” said senior analyst Jamie Koutsoukis.

The number of passengers travelling between Canada and the U.S. increased 1.1 per cent to 22.2 million last year.

WestJet and Delta said their preliminary agreement anticipates co-ordinated schedules for new destinations and expanded codesharing, which allows each partner to book seats on the other’s flights.

WestJet CEO Gregg Saretsky said the joint venture will help the company to narrow the gap with Air Canada.

“It was a long way to neutralizing the disadvantage that we have suffered, I would say, over the last decade since we launched service in the transborder,” he said Wednesday during an investor conference.

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