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Baggage fees have become a notable income stream for airlines, making up about 4.1% of global airline revenue in 2023. This represents a 15% uptick from the previous year, according to a report from IdeaWorks Co. and CarTrawler, a service that offers real-time updates on rental car prices and availability.
These fees play a significant role in airlines’ ancillary revenue, helping them offset various expenses. They encompass charges for checked baggage, including additional fees for heavier or oversized bags, and sometimes even for larger carry-on bags.
Initially introduced as a response to economic pressures during the oil shock of 2007-2008, baggage fees quickly became standard practice among major U.S. carriers. Previously offering two checked bags with every fare, airlines began charging for the first checked bag to cope with rising fuel prices.
Recently, American Airlines announced fee hikes for first and second checked bags, marking its first adjustment in approximately six years. The cost for a first bag checked at airport counters rose from $30 to $40 for domestic flights, while online check-in fees increased from $30 to $35. Additionally, the fee for all second bags increased from $40 to $45 for domestic flights, impacting domestic, Canadian, and short-haul international flights.
Moreover, traditional airlines are seeing significant revenue from fees associated with assigned seating, a practice initially adopted by low-cost carriers. The swift adoption of these fees by global network carriers has been notable, with revenue from assigned seating now rivaling that generated by baggage fees, surpassing $30 billion globally.
