Tags: airlines | bag | fees | earn | less

Airlines' Bag Fees Earn Less, But Lots of Other Charges Chip In

Image: Airlines' Bag Fees Earn Less, But Lots of Other Charges Chip In

Tuesday, 06 May 2014 08:10 AM

By Michael Mullins

Airlines' bag fees earned less revenue in 2013 compared to the year before but the lost money is being made up by nickel and diming fliers with a bunch of other fees.

According to data released by the U.S. Department of Transportation, in 2013, the nation's leading 16 airlines earned $3.35 billion from bag fees, a 4 percent drop from 2012.

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Despite the revenue decline, airlines turned a significant profit in the last quarter of 2014, earning $7.3 billion. Over the same period in 2012, the same 16 major airlines had a loss of $188 million, The Associated Press reported.

So how are airlines able to make greater profits considering declining bag fees? By charging customers a slew of other fees, like changing ticket reservations and making their flight more comfortable with preferred seating and early-boarding privileges. In 2013 alone, airlines brought in $2.81 billion from ticket reservation changes, a 10 percent increase from 2012.

Aviation consultant and former American Airlines executive Robert Mann told the AP that he believes airlines are intentionally making basic economy uncomfortable to pressure customers to pay extra for a better seat, one that has more legroom or boards earlier.

As for why there has been a decline in bag fees, Mann said, "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."

According to the former airline executive, most people who get "whacked by the bag fee" are not frequent fliers, who he believes are increasingly relying on car, bus and train travel as opposed to planes to save money.

Though there was an overall decline in bag fee revenue, Delta Air Lines was the leader of the pack, raising $833 million in 2013 from bag fees. Delta was followed by United, which took in $625 million, then US Airways, which raised $528 million, and American Airlines which had $506 million in bag fee revenue.

Additionally, Delta also led in ticket reservation change fees with $840 million in 2013, the AP noted.

The 2013 bag fee decrease is seen by many as a leveling off of revenue in recent years, considering that since 2008, when the financially strapped American Airlines first expanded fees to checking a regular bag or two, airlines overall have seen an uninterrupted rise in bag fee revenue until 2013, in some cases doubling from one year to the next.

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