I recently spent a week in California on business. Some of my friends think that it was actually a vacation. Though believe me, the 14 hours a day working would approve otherwise. But I digress. During my trip, I was surprised by a number of fees that I did not expect to pay.

Why all of the extra fees?

First, let me give some background as to why the travel industry is charging for amenities that used to be “free.” I happen to work in the travel industry and am very familiar with the pricing schemes that airlines, in particular, employ.

In the past, an airline ticket or hotel room price encompassed many of the amenities such as baggage or Internet. The move to charging for these services is often called a-la-carte or unbundled pricing. The move to a-la-carte pricing is based in simple economics. In Economics 101, we learn that consumers are willing to pay different prices for the same good or service. If you were to graph all of the prices a given populous is willing to pay, then you’d have a Demand curve. By making checked baggage, carry-on baggage (thank you Spirit Airlines), in-flight entertainment, and so forth available at a price, an airline allows consumers to pay just what they are willing to pay.

Essentially, the travel industry provides a basic service like a hotel room and then says, “Everyone who wants to pay $15 more, please pay here. Everyone that wants to pay $25 more, please pay here. Everyone who wants to pay…” You get the point. A-la-carte pricing benefits the company because travelers who don’t want to pay much, don’t have to. For example, I can book a cheap flight and carry-on my luggage.

A-la-carte pricing schemes also benefit consumers since you are able to pay less if you want less. The price of the extra amenities are no longer bundled into the price of the service. However, you need to be aware of what is free and what you have to pay for before traveling or you may be caught off guard and end up paying much more than you expected.

7 Airline and hotel fees

Consider contacting your air carrier and hotel before your trip to find out if the following are free or what they cost.

Airlines

1. Checked Baggage – If you’ve flown in the last year or two, then you probably know that you have to pay for checked baggage. However, some airlines charge only for the second or third piece and the first piece is free. Others, like Delta, charge for even the first piece. Further, the price per bag goes up with each piece. Other airlines, like Southwest, do not charge for any checked baggage.
2. Carry-on Baggage – Spirit Airlines recently introduced a fee for carry-on baggage, while lowering the price of a ticket at the same time. In part, this fee is in response to the frequent flyers who were “gaming” the system by not checking an over-sized piece of luggage and showing up at the gate with it. Since the luggage is over-sized, it has to be checked and can’t be carried on. Since checking at the gate was free, the traveler avoided the checked baggage fee. Gone are those days on Spirit.
3. In-flight entertainment (IFE) – I have a particular expertise in this area. If you are sitting in Coach or Economy class, expect to pay for IFE. On average, one movie will cost about $6. If you are flying First or Business class, then the IFE is usually free. Some airlines will give you free access to content such as TV shows and charge only for premium content such as movies.  If you are traveling with kids, you’ll definitely want to find out what’s on board and what it costs. You can use SeatGuru.com to find out if your flight will have in-flight entertainment. But you’ll have to talk to the airline to find out the cost.
4. Restrooms – Ryanair, based in Ireland, is well-known for inundating passengers with fees. The CEO, Michael O’Leary, stated in April of this year that they were considering charging for restroom access. The point is, before you fly, do some research online about the airline and find out what you’ll have to pay extra for.

Hotels

1. Continental Breakfast – Even though your hotel offers a complimentary continental breakfast, find out what is included. For example, I’ve seen them range from eggs, pancakes, and sausage to just pastries and cold cereal. If you are picky about breakfast, which I am when traveling, then find out what’s on the menu.
2. Internet Access – Many hotels offer free Wi-Fi Internet. However, the Westin where I stayed last week did not. I had to pay $9 per day for poor Internet access.
3. Business Center – Unfortunately, I do more business travel than leisure. And almost always, I need to print something. At the Westin where I stayed last week, I was frustrated to find that I had to pay $6 to access the computer in the psuedo-business center (on top of the $9 for Internet access I had already purchased) just to print three pages. Most hotels in my experience don’t charge for a limited access to a computer and printer.

Expect to see more fees

The reality is that airlines are not making any profits. In order to recoup huge investments in expensive aircraft and infrastructure, the a-la-carte pricing scheme allows airlines to make more money and stay in business. Though, I hate to end on a sad note. So enjoy one of my favorite MAD TV skits.

For more information on financial planning topics, sign up for our RSS Feed and receive new posts directly in your favorite RSS reader.

(Photo Credit: Examiner.com)