Baggage-fee revenue jumps 23% in third quarter
The sky appears to be the limit when it comes to the money airlines make by charging passengers to check luggage.
The 20 largest U.S. carriers collected $906.4 million in baggage-related revenue during the third quarter, a 23% jump from the same period a year earlier, according to data released Monday by the Bureau of Transportation Statistics.
International fees adopted this year, a rebound in air travel and growing passenger frustration over limited overhead space in airplane cabins all contributed to the skyrocketing fee income, observers said.
Some passengers are tiring of the hassle of dragging bags onboard planes, while carriers are cracking down and forcing travelers to check jumbo-size carry-on bags before they leave airport lobbies, noted Tom Parsons, founder and chief executive of BestFares.com.
“It could be that more people elected not to fight for overhead space too,” Parsons said.
Adopted by every U.S. carrier except Southwest Airlines, the charges for all checked luggage continue to be lucrative for U.S. airlines, which are on pace to report an annual profit this year for the first time since 2007.
Over the first three quarters of the year, the top 20 carriers pocketed $2.6 billion in baggage fees and $1.7 billion in fees to cancel or change reservations, according to BTS data.
And though some passengers still bristle at a la carte charges for services that were formerly free, for many they’ve become just another travel cost, analysts said.
With overseas carriers beginning to adopt similar fees, U.S. carriers this year began to charge economy-class passengers about $50 to check a second bag to Europe and other international destinations. As with other baggage fees, elite frequent fliers and first- and business-class travelers are exempt.
The volume of luggage handled by American Airlines has leveled off this year, averaging 0.8 to 0.9 of a checked bag per passenger, or about 205,000 checked bags a day, said Tim Smith, spokesman for Fort Worth-based American.
That’s down from about 1.1 checked bags in 2008, when American and other major carriers turned to baggage and other fees to offset losses prompted by high oil prices and the recession. Smith attributes nearly all of the decline in luggage hauled by American to fewer second checked bags. About 25% of the carrier’s customers pay to check bags.
Overhead space is expected to be a scarce commodity for luggage during the holiday season as passengers also try to stuff coats and gifts into cabin bins.
But Parsons noted that carriers have deployed more staffers at security checkpoints to enforce size limits for carry-on bags, especially at airports where they operate large hubs.
“If you have one of those roller bags with expandable zipper pockets and you expand it all the way out, you are a walking red flag,” Parsons said. “There’s also a very good chance it’s not going to fit in the overhead anyway.”
While analysts question what else carriers can do to wring greater baggage income from passengers, no carrier has followed Spirit Airlines’ example and begun charging passengers for carry-ons.
But the policy appears to have reaped rewards for the ultra-low-cost carrier. After Spirit rolled out the charges Aug. 1, its baggage-fee revenue rose to $22.9 million in the third quarter, up 36% from the previous quarter.
