Baggage fees that were implemented last year by most of the nation’s air carriers may have annoyed many customers, but they represented a cash cow for cash-strapped airlines, according to recently released government figures.

The ancillary revenue for check luggage totaled $1.15 billion in 2008, according to the U.S. Department of Transportation (DOT) . The data gave the first glimpse of U.S. carriers' extra revenue but it did not account for all ancillary revenue collected by U.S. airlines. With jet fuel prices stabilizing, the cash is helping to soften the blow from the plunge in travel as the result of recession.

Traditionally, airlines did not charge for the first two pieces of checked luggage unless they exceeded weight limitation. But in early 2008, United Airlines began charging $25 for the second checked bag. Last July, US Airways started charging $15 for the first checked bag. Delta Air Lines this July starts charging passengers on international flights a $50 fee each way for checking a second bag. It expects the new international second checked bag fee to generate about $100 million annually.

Many of the competing airlines followed suit and the baggage fees were followed by a whole host of other charges for meals, snacks, non-alcoholic beverages and booking tickets by phone. AirTran Airways is now charging more for over-wing exit seats with more legroom.

American Airlines topped the industry in the baggage fee windfall, according to the DOT, collecting $278 million in baggage fees during 2008, followed by US Airways, with $187 million, and Delta Air Lines with $177 million. United Airlines fed the corporate coffers $133 million while Northwest Airlines gained $121 million and Continental Airlines made $97 million.

Southwest Airlines garnered a mere $25 million in excess baggage fees in 2008, but that was to be expected inasmuch as the low fare airline refused to charge for checking the first two pieces of luggage. In fact, Southwest built a marketing campaign around its decision to not join the herd in implementing new charges. (Yes, the peanuts are also still free.)

Southwest’s Gary Kelly, said "We believe that we're having a meaningful impact and creating awareness among customers that we are virtually alone in not charging the bag fee, and that is translating to higher demand for Southwest Airlines.”

U.S. carriers said they were forced to levy the additional charges because of last year’s skyrocketing fuel prices. The cost of jet fuel is no longer one-third of operating cost, but the baggage fees appear to be here to stay, or as long as demand for passenger seats remain anemic and summer fare sales remain in place.

David Castelveter, the Air Transport Association spokesman, said the baggage fees are necessary as most members continue to bleed red ink.

In February, US Airways (where Castelveter used to work) stopped charging passengers for soft drinks saying the practice put the air carrier at a “disadvantage”. But the airline says it will still generate $400-$500 million in 2009 from “a la carte” charges, such as checked baggage fees, choice seats and blanket and pillow charges (the so-called take home US Airways Power-Nap Sack). “For $7, customers can rest easy knowing they have everything they need to relax in-flight with US Airways’ new, personal travel pillow and blanket kit,” the air carrier said in a press release.

On another matter, DOT reports that the on-time performance of major U.S. air carriers improved in March compared with a year ago, but was worse than February. And the rate of cancellations was lower year-over year, but again higher than in the previous month, according to the latest Air Travel Consumer Report.

The DOT's Bureau of Transportation Statistics said the 19 carriers reporting on-time performance recorded an overall on-time arrival rate of 78.4 percent in March, better than the 71.6-percent on-time rate of March 2008 but down from the 82.6 percent recorded in February of this year.

In March, the carriers canceled 2.1 percent of their scheduled domestic flights, a lower rate than the 2.6-percent cancellation rate of March 2008 but higher than the 1.2-percent rate posted in February of this year.

As usual, Hawaiian Airlines, with its CAVU operating environment, had the best on-time performance for the month, at 91.5 percent, while Pinnacle Airlines had the second-highest, at 85.1 percent, and Southwest Airlines had the third-highest, at 83.9 percent.

Atlantic Southeast Airlines, which feeds traffic to Delta Air Lines, had the worst on-time performance in March at 60.9 percent. Alaska Airlines, a unit of Seattle-based Alaska Air Group, had the second-lowest on-time arrival rate in March, at 70.2 percent, while ExpressJet Airlines had the third-lowest, at 71.7 percent. Both Alaska and SkyWest Airlines, Inc, the parent company, for ASA, cited horrendous weather in the Pacific Northwest and Atlanta in the first quarter earnings conference. Indeed, weather in Atlanta, said SkyWest, was inprecedented.

In March, the carriers reported that 7.29 percent of their flights were delayed by aviation system delays, compared to 6.58 percent in February; 6.49 percent by late-arriving aircraft, compared to 4.79 percent in February; 4.84 percent by factors within the airline’s control, such as maintenance or crew problems, compared to 4.17 percent in February; 0.62 percent by extreme weather, compared to 0.43 percent in February; and 0.04 percent for security reasons, compared to 0.02 percent in February.

The most frequently delayed flight in the month was Comair Flight 6382 from Atlanta, GA to Newark, NJ, which was late 96.3 percent of the time. Comair, a regional carrier, is a subsidiary of Delta.

Atlantic Southeast Airlines cancelled the most flights in March, 5.3 percent, followed by Comair (3.7 percent) and Alaska Air (3.3 percent). Scoring the lowest rate for canceled flights was Hawaiian Airlines, only 0.1 percent.

In March, the carriers reported that .0158 percent of their scheduled flights had tarmac delays of three hours or more, up from .0088 percent in February. There were 21 flights with tarmac delays of four hours or more in March.

The five flights with the longest tarmac delays in March were all Delta flights. Each was delayed on the tarmac for more than five hours. Each flight was on the same day, March 1. Delta's overall on-time arrival rate in March was 73.9 percent, which ranked 16th out of the 19 airlines.

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