Remember in the not-so-distant past when we thought of airlines as a way to transport not just ourselves but also our, well, stuff? I’ll admit to once borrowing 60 pounds of power tools from my brother, then checking them gratis aboard a transcontinental Delta Air Lines flight. That scenario would be unthinkable today, with most domestic carriers charging $60—at least—to check two suitcases, and that’s not even accounting for bags weighing more than 50 pounds. And it’s only getting worse: Spirit Airlines’ new $30 to $45 carry-on fee for overhead-storage bags is just the latest volley in a game of brinkmanship over how much airlines can get away with charging—one that’s left passengers scrambling and increasingly infuriated.
In 2009 alone, airlines generated $7.8 billion from ancillary revenue, of which $2.7 billion came from baggage fees. That’s a whopping 488 percent increase over 2007—and 2,186 percent more than they were making in 1990. The baggage-fee escalation started in 2007, when Spirit became the first of the contemporary U.S. carriers to charge for luggage regardless of weight. In the name of rising fuel prices, the legacy airlines followed suit, charging for the second, and then the first, checked bag (in addition to a slew of other ancillary fees). The airlines often describe these charges as “à la carte pricing,” or the “unbundling” of the price of a ticket. But as domestic airfares show signs of rebounding since their 2009 slump, it's all the more apparent that the bag fee is just that—an additional fee.
Airlines really do need the money. For instance, Continental and United Airlines, who announced their pending merger earlier this year, lost $282 million and $651 million, respectively, in 2009. Carriers could raise fares, of course, but that’s weighted with uncertainty about how competitors and customers will respond. Baggage fees, on the other hand, are a much simpler solution. That’s why, even though fuel prices have dropped from their 2008 high, airlines are still compensating for their losses—and using luggage charges to hedge against future rises.
It’s worth noting that even with fees, checked luggage remains a loss-making enterprise. As Jay Sorensen, president of the Wisconsin-based airline consultancy IdeaWorks Company, notes: “Airlines would only cover their costs if they were to do away with all the infrastructure and labor involved in getting your bag on the plane.” In other words: as long as they’re handling bags, you’ll be paying for it.
Perhaps what’s most frustrating for passengers, however, is not the fees themselves, but trying to keep track of them all. At press time, New York senator Charles Schumer was busy securing promises from five of the largest U.S. carriers that they wouldn’t follow Spirit into the realm of carry-on fees. Even so, airlines are finding other ways to sneak in new charges: last year, several airlines, including US Airways, Continental, Delta, and United, began imposing an extra $2 to $5 if travelers paid for checked bags at the airport rather than paying online.
But steps are being taken to ease the burden for passengers. The International Air Transport Association plans to introduce a central database to help travelers keep all of the baggage fees and rules straight. (The caveat: there is no standard when it comes to international travel, where fees and rules vary according to point of origin.) And the newly proposed Department of Transportation’s passenger protection rules mandate that advertised ticket prices reflect all nongovernmental surcharges.
Airlines, meanwhile, are getting wise and offering to bundle their fees in creative ways. United recently introduced two packages available at 72 U.S. airports that combine features such as extra-legroom seats, earlier boarding, and complimentary checked baggage—essentially, many of the services that elite frequent fliers already receive at no extra charge.
Even more interesting are signs that airlines are beginning to recognize that if they’re going to make passengers pay, they had better deliver the goods (literally). Alaska Airlines just tweaked its fees (a $5 increase on the first bag and a $5 decrease on the second) and packaged them with a customer service agreement: passengers are guaranteed to get their bags within 20 minutes of parking at the gate. If not, they have the option of choosing between 2,000 Alaska Airlines Mileage Plan miles or a $20 flight credit. It’s the kind of carrot that Sorensen anticipates airlines will start handing out in the future to a public tired of paying extra and starved for some of the services of old.