We’re less than two months into 2024, and already three U.S. airlines have raised checked bag fees. Now, the lingering question: Will more follow suit?
After bag fee increases by both Alaska Airlines and JetBlue in recent weeks, American Airlines made headlines Tuesday when it revealed steeper bag fees, along with other changes to its AAdvantage loyalty program.
Going forward, instead of $30 for the first bag, American flyers will have to pay an additional $5 or $10 on a domestic flight, depending on how you pay: It’ll cost $35 if you pay online ahead of time, or $40 if you wait to pay for the bag at the airport.
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Unsurprisingly, the announcement drew the ire of many customers.
“Great, now people can bring even more on board and make boarding and deplaning take longer,” one reader commented on TPG’s Facebook page.
“I presume the other major U.S. airlines will follow suit to some degree, or potentially in another capacity, to widen their margins,” said another.
That last comment is a prediction rooted in some history.
After all, back in 2008, there was a definite domino effect as U.S. carriers first began charging customers for their first checked bag in the face of skyrocketing fuel prices.
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At the time, American told investors it expected its new $15 bag fee (about $21 by today’s standards, adjusted for inflation) would generate several hundred millions of dollars annually.
“It was a way for them to immediately generate revenue, because they had a dire need, because of the huge increase in fuel prices,” recalled Jay Sorensen, president of the airline consultancy IdeaWorks.
Fast-forward some 15-plus years, and those fees have never gone away. Far from it.
How much do airlines make on bag fees?
According to the Bureau of Transportation Statistics, U.S. airlines made $6.8 billion from bag fees in 2022, the last full year for which it has statistics.
That was up about 17% from pre-pandemic 2019, and roughly double that of a decade ago (though with a sharp rise in passenger traffic over the last 10 years, too).
And, as frequent travelers know, add-on fees have become far more prevalent since then.
Many budget airlines offer low base fares, but then exclude plenty of services that travelers once expected would be included with a ticket. That means you can end up paying extra for everything from seat selection to a full-size carry-on bag. It can be a similar story with many larger carriers’ basic economy fares, too.
Ancillary fees are a significant source of revenue for ultra-low-cost carriers like Spirit Airlines and Frontier Airlines.
Keep in mind that airlines enjoy far less stringent taxes on optional fees than on fares; a carrier typically makes more money off $100 in ancillary charges than it does off a $100 ticket.
So there’s little incentive to do away with this “unbundling” trend — one that Rob Britton, a former American Airlines official now on the faculty at Georgetown University’s McDonough School of Business, argues has had some benefits.
“It’s just like restaurant pricing. If you don’t want dessert, you don’t pay for dessert,” Britton argued. “It gives the airline, obviously, some nice additional revenues. And it gives the customer the ability to pay for only what they want. And isn’t that a good thing?”
Suffice to say, not everyone sees it that way. The Biden administration, for one, has often folded airlines into an ongoing consumer protections push, including directing scrutiny toward add-on fees.
Concerns about profitability
As airlines have announced this latest round of bag fee hikes, carriers have again pointed to rising costs. In recent months, numerous airlines have bemoaned steeper fuel and labor costs as a pesky hurdle to profit margins.
“It’s one step we are taking to get our company back to profitability,” JetBlue said in a statement regarding its new fee structure, which sets the price of a checked bag at $35 for customers who pay at least 24 hours in advance, or $45 at the airport.
American likewise cited inflationary pressures in announcing its first baggage fee hike since 2018 — a year in which multiple airlines also raised bag fees in a matter of days.
Will history repeat itself?
“I suspect, what will happen, since this is a business where everything is quickly matched, [is] that the other network carriers — Delta and United — are probably going to march right along with it,” Britton predicted.
Sorensen is less certain.
“If you buy into the belief that past practice is a good predictor of the future, the answer to that question would be yes,” he said. “I’m not willing to jump on that, because I think that there are more moving parts with these decisions nowadays than there have been in the past.”
For one, Delta Air Lines and United Airlines, which have announced no fee hikes of yet, have both run ahead of their competitors in profitability of late.
And Sorensen believes American’s fee hike may also be part of a larger strategy meant to entice more customers to add a cobranded credit card to their wallet, since most cardmembers get their first checked bag free.
“They’re creating an environment in which the credit card looks that much more attractive,” Sorensen said.
Delta similarly enticed more customers to sign up for its SkyMiles program last year when it first rolled out free Wi-Fi across its network, requiring only a loyalty sign-up. And, Delta executives said last year, an average of 1 in 8 SkyMiles members typically ends up signing up for a Delta-American Express credit card at some point.
How to avoid paying for checked bags
However you slice it, though, checking a bag is getting more expensive on a growing number of airlines.
In 2008, when checked bag fees started en masse on American, you’d pay $30 round-trip. Today, if you waited to pay for your bags at the airport, you’d pay $80 round-trip.
If you did the same on JetBlue, you’d pay $90 round-trip.
But there are ways to avoid paying for a bag beyond simply buying a higher-priced premium cabin ticket.
Go without a checked bag
The most obvious solution, of course, is to ditch the checked bag and go carry-on only. Many travelers prefer this method anyway, to avoid the hassles of checking a bag and waiting at baggage claim.
That certainly was the case during the baggage chaos we saw two years ago.
However, there can be some hang-ups with this strategy. First, you’ll need to comply with the Transportation Security Administration’s 3-1-1 requirements, which means no large bottles of liquids — such as shampoo or beverages.
Plus, many tickets (on budget airlines or in basic economy) don’t allow a free full-size carry-on. And there may not be space in the overhead bin for your bag. In this case, you should still be able to gate-check it to your final destination — often at no cost, but there’s some hassle there.
Add a credit card that gets you free bags
Most airline cobranded credit cards come with a free checked bag — often for the cardholder and a certain number of traveling companions on the same reservation.
There are also a handful of flexible currency rewards credit cards that include broad airline or travel credits that can reimburse travelers for ancillary costs for items like checked bags in the form of a statement credit.
Qualify for elite status
All of the legacy U.S. carriers offer a free checked bag for elite status members as a perk for even those who reach just the lowest tier of status.
So, if you can earn your way to status, you can often earn one or more free checked bags on that carrier.
Condense into fewer bags
If all else fails, condense into fewer bags: Fewer bags means fewer fees.
Remember: Every traveler on every U.S. airline gets a free personal item that can fit under the seat in front of them, like a backpack.
Don’t forget about Southwest Airlines
And, finally, we’d be remiss not to mention Southwest Airlines. The Dallas-based carrier still offers every traveler two free checked bags.
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