Baggage fees are a boost to airline revenues, but they are unraveling the business of another airport staple — Smarte Cartes.
Bob Hope Airport officials agreed last week to slash the concession fee they charge Smarte Carte, which rents luggage carts from racks by the terminals, by more than 80%. Business is tanking as airline luggage fees of $25 to $35 per checked bag spur travelers to pack lighter, Smarte Carte officials told the airport.
In response to the revenue decline, the Burbank-Glendale-Pasadena Airport Authority has agreed to eliminate Smarte Carte’s annual $57,000 rental fee in exchange for 10% of the company’s receipts. The change is forecast to save the company more than $47,000 next year.
“Smarte Carte has seen a real fall-off with the business they are doing here,” Denis Carvill, the airport’s director of contracts and properties, told the authority.
Representatives for Minnesota-based Smarte Carte, which provides carts at 150 airports around the country and hosts cell-phone charging stations, did not return calls seeking comment. But airport officials reported that Smarte Carte revenues are off 25% to 30% around the nation, and as much as 40% at Bob Hope Airport.
Jack Penning, an aviation market analyst with Oregon-based Sixel Consulting Group, said ancillary aviation businesses need to rethink their strategies as airlines impose new fees and travelers adapt.
“Increasing bag fees have not only caused more people to carry their bags onto the plane, but they’ve also forced people to pack lighter,” Penning said.
Travelers also have less need for curbside bag check, which is why airlines have added fees for the service, he added.
“There simply weren’t enough passengers using the service to justify the cost to the airline without an extra fee,” Penning said.
With air travel down from pre-recession highs, and fuel costs raising expenses for carriers, many airlines now charge $25 for one checked bag and $35 for a second checked bag.
Yet Carvill said Smarte Carte had reason to be hopeful in signing a five-year lease extension, which goes into effect next month.
Plans to build a $120-million transit hub for buses, rental cars and riders from the nearby Metrolink station will have many travelers walking hundreds of yards to and from Bob Hope Airport’s two terminals.
The airport plans to break ground on the transit hub this year and open it in late 2012.
“That really interested them going forward,” Carvill said.