Top airlines rake in $33B from bag fees
Luggage fees started as 'economic necessity' during oil shock of 2007-2008
The top 20 global airlines hauled in more than $33 billion in revenue from bag fees last year, according to an annual report.
That accounted for about 4.1% of global airline revenue in 2023. It was also an increase of 15% from the $29 billion the companies collected in 2022, according to a report from IdeaWorks Co. and CarTrawler, which helps consumers get real-time information on rental car prices and availability.
Baggage fees, according to the report, are seen as a "significant component of ancillary revenue" to help carriers offset other costs.
AMERICAN AIRLINES RAISES CHECKED LUGGAGE FEES
It comes from checked baggage in the aircraft hold, added fees for heavy and extra-large bags and, in some instances, the price charged for larger carry-on bags.
It started "as an economic necessity" as airlines sought relief from the dramatic jump in fuel prices during the oil shock of 2007 and 2008, according to the report. In short order, major U.S. carriers, which previously offered two checked pieces with every fare, began charging for the first checked bag.
The annual report says baggage fees are deemed a "significant component of ancillary revenue" to help carriers offset other costs. (iStock / iStock)
Shortly after the data was released, American Airlines unveiled increased fees that many customers will have to pay for their first and second checked bags. It was the carrier's first increase in about six years.
American upped how much it charges for a first bag checked at airport counters from $30 to $40 for domestic flights. Fees for bags checked online in advance increased from $30 to $35. The cost of all second bags rose from $40 to $45 for domestic flights.
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The fees affected domestic, Canadian and short-haul international flights.
Travelers walk with their luggage at Los Angeles International Airport on Aug. 31, 2023. (Mario Tama / Getty Images)
At the same time, traditional airlines have pulled in a significant amount of revenue from fees tied to assigned seats.
While low-cost carriers have been doing this for a decade, "the speed at which global network carriers added these fees has been surprising," the report said.
Now, "global revenue from assigned seating may now very well compare to the $30+ billion generated by baggage," it said.