The Department of Transportation reported that U.S. airline companies brought in $3.35 billion in baggage fees last year, yet that healthy revenue stream has continued to drop as travelers have gotten better at figuring out ways to avoid paying baggage fees
Savvy airline passengers are working the system in order to skip annoying baggage fees. So why are you still forking out $30 to check a bag when you fly?
Checked baggage fees have been around for so long that they no longer catch flyers off guard. In fact, according to one traveler survey, passengers have grown so accustomed to baggage fees that we’re increasingly inclined to deem them “reasonable.”
That doesn’t mean that flyers are overjoyed to pay them. In fact, data was just released indicating that travelers are getting better at avoiding them.
According to the Department of Transportation, airlines operating in the U.S. collected $797 million in baggage fees during the fourth quarter of 2013, and $3.35 billion in baggage fees for the entire year. Those are huge numbers, but they actually represent a decline from the year before: Baggage fees for the fourth quarter of 2012 totaled $823 million, while the sum for all of 2012 was $3.49 billion. In other words, the airlines took in roughly $100 million less in passenger baggage fees last year.
As anyone who has flown recently can attest, the decline in paid baggage fees is taking place at a time when planes are more crowded than ever (so it’s not a matter of fewer people flying) and when both the variety and average price for baggage fees have been on the rise (so it’s not like airlines are getting rid of them as a revenue-raising tactic). What’s been happening is simply that travelers have gotten better at working the system. They’re planning ahead and proactively figuring out ways to avoid paying baggage fees.
The simplest way to skip the checked luggage fee is by packing less and flying only with a carry-on—provided, of course, that the airline you’ve booked with doesn’t charge for carry-ons. (While more airlines are charging for carry-ons, they remain the exception, for now.) While this strategy is a money saver for airline passengers, its widespread adoption has also resulted in an especially chaotic, ugly, and unpleasant scene during the plane boarding process, as a recent Christopher Elliott column explained, with agitated, pushy passengers all jostling to find space in overhead bins for the bags they didn’t want to pay a fee to check.
(It also must be noted that Southwest Airlines and JetBlue allow all passengers to check at least one bag free of charge. That’s great for travelers, but there’s nothing new about these policies, so they aren’t major factors explaining why baggage fees overall have dropped.)
Another line of strategy travelers are using to avoid baggage fees is one that the airlines themselves must love: signing up for an airline-affiliated credit card and/or attaining a high frequent flier status. Both of these ploys usually allow the traveler one free checked bag on domestic flights. Airlines encourage passengers to embrace these options because the benefits of boosted revenues via customer loyalty and credit card fees outweigh the losses incurred because these travelers aren’t paying baggage fees out of pocket. As aviation consultant Robert Mann explained to the Associated Press about the decline in baggage fees, “You have more people exempt (from the fee) because they use the right credit card or they get status in the airline’s loyalty program.”
Despite the fall in baggage fees, the airline business is booming. The $3.35 billion collected in baggage fees last year represents only 1.7% of airlines’ total operating revenue. The airlines collected $2.8 billion in reservation change fees in 2013, up from $2.5 billion the year before. Most importantly, the airlines took in $120.6 billion in fares—just the price of flights—and $199.7 billion in revenues overall, for a net profit of
$12.7 billion last year, compared to $98 million in 2012. So, despite travelers becoming more savvy about baggage fee avoidances, the airlines are doing just fine thank you.
Perhaps as a sign for what’s to come for travelers, no airline is doing better than the most fee-crazed carrier of all. As the South Florida SunSentinel reported, Spirit Airlines, which charges for carry-ons, reserved seating, on-board beverages, and almost anything else imaginable, and which has an outsized presence in the Fort Lauderdale airport, has seen its revenues soar, mostly as a result of growth in routes and an increased intake in fees. For 2013, Spirit’s overall revenues hit $420 million, up from $328 billion in 2012. Spirit’s change fee revenues rose from $7.3 million to $8.6 million, and it was one of the few carriers to take in more baggage fees–$53.2 million during the fourth quarter of 2013, compared to $42.6 million for the same period the year before.