Airlines earned $33B from bag fees last year, report finds
FILE-Travelers search for their suitcases in a baggage holding area for Southwest Airlines at Denver International Airport on December 28, 2022 in Denver, Colorado. (Photo by Michael Ciaglo/Getty Images)
A new report reveals that some of the top 20 airline companies made a staggering $33 billion in bag fees last year, accounting for 4.1% of global airline revenue in 2023.
This amount is also an increase from the $29 billion these businesses earned in 2022.
Details of these earnings are in a recent report from IdeaWorks Co., a company evaluating airline ancillary revenues, and CarTrawler, which helps consumers get real-time information on rental car prices and availability.
According to the report, baggage fees are considered a "significant component of ancillary revenue" to help carriers offset other costs.
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Checked bags fees started as an "economic necessity" for traditional airlines seeking relief from a spike in fuel prices during the oil shock of 2007 and 2008.
Major U.S. carriers have transitioned from including two checked items with every fare, to charging for the first bag checked by travelers. Over time, fees for checked bags have been adopted by airlines worldwide.
The report notes that baggage fees represented the "largest ancillary" category, but this began to change during COVID-19 when airlines started charging for assigned seats, a practice that global carriers have adopted.
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Now, "global revenue from assigned seating may now very well compare to the $30+ billion generated by baggage," according to the report.
The latest report comes after American Airlines and Jet Blue raised their rates for baggage fees.
American Airlines said checking a bag on a domestic flight will rise from $30 now to $35 online and $40 if purchased at the airport. The fee for a second checked bag will increase from $40 to $45 online and at the airport.
While JetBlue’s prices for the first checked bag on U.S., Latin America, Caribbean and Canada flights within 24 hours of takeoff are higher as of the beginning of the month, FOX Business noted.
For first bags checked within 24 hours of departure, JetBlue increased the fee for Blue Basic, Blue and Blue Extra tiers to $45. That marked a $10 increase from the $35 it was for reservations before Jan. 11 and a $5 from the $40 it was Jan. 11-31, according to JetBlue’s website.
First bags checked over 24 hours before departure have also received a hike this year, the airline’s website showed. Those now cost $35 for the same three fare types.
FOX Business contributed to this report. This story was reported from Washington, D.C.