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Time of India
2 days ago
- Business
- Time of India
$7.27 billion and counting: How checked baggage fees became a goldmine for airlines
Airline companies are making huge profits from baggage fees. Earlier, airlines provided free baggage service. Now, passengers pay extra for checked baggage. This change started in 2008 and continues today. Passengers now prefer smaller bags to avoid fees. Airlines earned billions from these charges. The trend of charging for bags is likely to continue. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads What began as a temporary solution to rising fuel costs has evolved into a permanent, multibillion-dollar profit engine for the airline industry. In 2024 alone, U.S. airlines collected a record-breaking $7.27 billion in checked baggage fees—surpassing pre-pandemic levels and cementing these charges as a key revenue included in the ticket price, checked baggage is now a major revenue stream. Passengers are increasingly packing light or opting for smaller carry-on bags to avoid these mounting costs. The industry shift has fundamentally altered how travelers plan, pack, and such as Air Canada and Southwest Airlines—the latter long known for its "bags fly free" policy—have recently reversed course. Southwest now charges $35 for a first checked bag, ending more than 50 years of free baggage backlash is growing. Passengers have labeled these charges 'junk fees,' as nearly every element of the flying experience—baggage, seat selection, even carry-on storage—is now monetized. Major U.S. carriers American, Delta, and United each earned over $1 billion in baggage fees in 2023, according to travel website Upgraded fee frenzy began in 2008, when American Airlines became the first U.S. airline to charge $15 for the first checked bag. Today, that fee is more than double—and no longer a novelty. According to the Bureau of Transportation Statistics, the industry's total bag fee revenue rose from $5.76 billion in 2019 to $7 billion in 2023, and now $7.27 billion in consultant Jay Sorensen of Ideaworks told BBC that legacy carriers followed the lead of budget airlines, who redefined pricing by unbundling services. 'There was a time when checked bags, seat selection, and meals were standard,' he says. 'But traditional airlines felt they had to adapt or lose out to low-cost competition.'The impact on travelers is clear: what was once included now requires careful financial planning. Rising fees are driving a boom in compact luggage sales, as travelers seek to avoid checked bag charges altogether.
BBC News
2 days ago
- Business
- BBC News
How airline fees have turned baggage into billions
With Air Canada and Southwest the latest airlines to charge passengers for check-in luggage, the ballooning cost of such ancillary or "junk fees" is provoking anger among politicians and consumer groups. At the same time, sales of suitcases small enough for passengers to take on the plane as hand luggage are outside Toronto's downtown airport, Lauren Alexander has flown over from Boston for the weekend. She describes such additional charges as "ridiculous"."It feels like a trick," says the 24-year-old. "You buy the ticket, you think it's going to be less expensive, then you have to pay $200 (£148) extra [to bring a suitcase]."To avoid the fee, Ms Alexander instead travelled with a small backpack as hand Riley, who is 27, agrees, telling the BBC, "It can be pricey." There was a time when checked bags, seat selection and your meals all came as standard on commercial flights. But that all changed with the rise of the budget airlines, says Jay Sorensen of US aviation consultancy was in 2006 when UK low-cost carrier FlyBe became what is believed to be the world's first airline to start charging passengers to check in bags. It charged £2 for a pre-booked item of luggage, and £4 if the customer hadn't paid in advance. Other budget carriers then quickly followed suit, with the so-called flag carriers or established airlines then also doing so, at least on shorter 2008 American Airlines became the first US airline to charge a fee, $15, for the first checked bag on its domestic Sorenson says such traditional airlines felt they had no choice when they "began to realise that the low-cost carriers were providing very significant competition". He adds: "They felt they had to do something to meet that." Fast forward to today, and US airlines alone made $7.27bn from check-in baggage fees last year, according to federal figures. That is up from $7bn in 2023, and $5.76bn in wonder then that more of us are trying to just take carry-on. Kirsty Glenn, managing director of UK luggage firm Antler, confirms that there is an ongoing surge in demand for small suitcases that meet airline dimension limits for carry-on luggage."We have seen huge spikes in searches online and on our website," she says. Describing a new small-dimension case her company launched in April, Ms Glenn adds: "Testament to the trend of only travelling with hand luggage, it's sold like crazy."At the same time, social media content about travel packing "hacks" and luggage that meets airlines' carry-on size measurements, have soared according to travel journalist Chelsea Dickenson. She makes this content for TikTok."Social media has really propelled this idea of needing a bag that fits the baggage allowance requirements, says Ms Dickenson. "It's become a core part of the content that I create and post on social media."Ms Dickenson, whose social media following has ballooned to close to a million followers, adds that her luggage videos have become a "core part of the content" she creates."It blows my mind," she says. "I could spend weeks and weeks researching a big trip, and the resulting videos will not come close to doing as well as me going and buying a cheap suitcase, taking it to the airport, testing it in one of those baggage sizes and reporting back." The overall global cost of all airline extra fees, from luggage to seat selection, buying wifi access, lounge access, upgrades, and food and drink, is expected to reach $145bn this year, 14% of the sector's total revenues. That's according to the International Air Transport Association, which represents the industry. This compares with $137bn last numbers have caught the attention of some politicians in Washington, and last December airline bosses were grilled before a senate committee. It was a Democrat senator who used the term "junk fees". He wants the federal government to review such costs and potentially fine airlines. We asked the US Department of Transportation for a comment, but did not get a response. But if having to pay for check-in wasn't enough, a growing number of airlines are now charging for hand luggage. For example, Irish budget airline Ryanair will only allow you to carry a small bag that fits under the seat in front of you for free. If you want to take a bigger bag or suitcase to go in the overhead locker that will cost you from £ European airlines that now have similar charges for hand luggage are Easyjet, Norwegian Airlines, Transavia, Volotea, Vueling, and has annoyed pan-European consumer group Becu (The European Consumer Organisation), which last month filed a complaint with the European cites a 2014 EU Court of Justice ruling, which said "carriage of hand baggage cannot be made subject to a price supplement, provided that it meets reasonable requirements in terms of its weight and dimensions, and complies with applicable security requirements".However, what determines "reasonable requirements" continues to be a grey area in need of an official can, however, be a different way of doing things, as shown by Indian airline IndiGo. Its boss Pieter Eibers says that it does not charge for check-in luggage."The entire philosophy here is different," he says. "We don't want long lines, and endless debates at gates about the weight of luggage. We don't have any of that. We turn our planes around in 35 minutes."
