Airline Lets Passengers Pay for Checked Bags With Miles

Sept. 7, 2010— -- In the past few years, airline passengers have been bombarded with a bevy of new fees, including the much-dreaded checked-bag charge. But one airline is now experimenting with allowing passengers to cash in frequent-flier miles for bag fees.

Gulf Air, Bahrain's national carrier, allows passengers who are beginning their trips in either Bahrain or London pay their excess baggage fees with frequent-flier miles instead of cash.

The Middle Eastern airline currently lets passengers check a bag up to 30 kilograms (about 66 pounds) for free. It's one of the most generous luggage allowances in the industry.

But some passengers still have more bags, especially students heading off to study abroad and larger families going on a long vacation.

Between London and Bahrain, the airline charges an extra $15 for each extra kilogram.

Now, passengers can instead use 6,000 miles for each extra 5 kilograms of weight, saving $75 in fees. The program launched June 1 for flights out of Bahrain and Aug. 1 for flights out of London. Last year, Gulf Air also began to allow passengers to use miles to gain entry to its airport lounges.

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So could this expand beyond the Middle East?

"Once the American airlines find out about it, I wouldn't be surprised if they initiated a program, but it's something that's very small. But it's very convenient," said Ray Neidl, an independent airline analyst.

Checked bag fees are a big business for the airlines, and a growing source of revenue.

In the first three months of 2010, U.S. airlines took in $768.5 million in baggage fees, according to the Bureau of Transportation Statistics. And that figure is up 33 percent from the same period last year.