Delta Decision to Add First Bag Fee Isn't Surprising

(MoneyWatch)  Now that the Delta/Northwest merger is done, it's time to start aligning operations to make sure that customers have a more consistent experience. Painting airplanes and using one name will come in time, but for now, they're starting with the basics. Most of the two airlines' fees will now be aligned, and the big news is that Delta will adopt the first bag fee. It's the last legacy airline to do so.

So, beginning on December 5, the bag fee will be $15 for the first and $25 for the second. That's actually a halving of the second bag fee that Delta just put into place, but it matches what Northwest has been doing. The airline will also reduce phone reservation fees from the absurdly high $25 to the still absurdly high $20 and fuel surcharges will be eliminated on the few domestic fares where they existed. Delta will also start offering to assign some of the more desirable seats onboard for a fee, and on the plus side, they will stop charging a fee to check bags with skycaps.

What does this all mean? Well, a lot of it is vindication for Northwest in that the combined airline has adopted most of Northwest's policies. But Delta CEO Richard Anderson had said at the NBTA convention in July that the airline believed that offering one free bag was a fair deal. Apparently he's decided that "fair" doesn't matter if they can make more money doing it another way.

And the decision does make some sense. Other airlines are reporting operational improvements from having fewer people check bags, and that's something that Delta wants to see as well. But once again, the world of product differentiation has taken a hit as all legacy carriers feel the need to do the exact same thing as all the others. It's disheartening to see that only Southwest has made a serious effort to create and communicate a differentiated product. Everyone else is happy to just get in line and do the same thing. And which airline had the biggest yield gains last quarter? Southwest. Interesting.

For Delta, this was a tough decision because they were playing a game of chicken with AirTran. That airline has a tremendous presence in Delta's home hub of Atlanta, and it was clear that Delta only wanted to do it if AirTran would do it as well. There were some remarks made on the AirTran conference call this past quarter that certainly indicated that AirTran was open to the idea. I guess Delta decided to seize on that opportunity. I imagine we'll hear from AirTran on this fairly soon, or maybe AirTran will try to grab the competitive advantage and run with it.