International fees help add $900M to airline revenue

By Julie Johnsson
Posted Dec. 13, 2010 at 3:26 p.m.

The sky appears to be the limit when it comes to the money airlines make by charging passengers to check luggage.

The 20 largest U.S. carriers collected $906.4 million in baggage-related revenue in the third quarter, a 23 percent jump from 2009 results, according to data released Monday by the Bureau of Transportation Statistics.

New international fees adopted this year, a rebound in air travel and growing passenger frustration over limited overhead space in airplane cabins all contributed to the skyrocketing fee income, observers said.

Some passengers are tiring of the hassle of dragging bags on planes, while carriers are  forcing travelers to check jumbo-size  bags before they leave airport lobbies, noted Tom Parsons, founder and CEO of

“It could be that more people elected not to fight for overhead space, too,” Parsons said.

Adopted by every U.S. carrier except Southwest Airlines, the controversial charges for checked luggage continue to be lucrative for U.S. airlines, which are on pace to report an annual profit this year for the first time since 2007.

In the first three quarters of the year, the top 20 carriers pocketed $2.6 billion in baggage fees and $1.7 billion in fees to cancel or change reservations, according to BTS data.

And while some passengers still bristle at ala carte charges for services that were formerly free, for many they’ve become just another travel cost, analysts said.

With overseas carriers beginning to adopt similar fees, U.S. carriers this year began to charge economy-class passengers about $50 to check a second bag to Europe and other international destinations. As with other baggage fees, elite frequent fliers and first- and business-class travelers are exempt.

The volume of luggage handled by American Airlines has leveled off this year, averaging 0.8 to 0 .9 checked bags per passenger, or roughly 205,000 checked bags per days, said Tim Smith, spokesman for the Texas-based American.

That’s down from about 1.1 checked bags in 2008, when American and other major carriers turned to baggage and other fees to offset losses prompted by high oil prices and the recession. Smith attributes nearly all of the decline in luggage hauled by American to fewer second checked bags. About 25 percent of the carrier’s customers pay to check bags.

Overhead is expected to be a scarce commodity for luggage during the holiday season as passengers also try to stuff coats and gifts into cabin bins.

But Parsons noted that carriers have deployed more staffers at security checkpoints to enforce size limits for carry-on bags, especially at airports where they operate large hubs.

“If you have one of those roller-bags with expandable zipper pockets and you expand it all the way out, you are a walking red flag,” Parsons said. “There’s also a very good chance it’s not going to fit in the overhead, anyway.”

While analysts question what else carriers can do to wring greater baggage income from passengers, no carrier has followed Spirit Air Line’s example and begun charging passengers for carry-ons.

But the new policy appears to have reaped rewards for the ultra-low-cost carrier. After Spirit rolled out the new charges Aug. 1, its baggage fee revenue rose to $22.9 million during the third quarter, up 36 percent from the previous quarter.

Baggage fees by airline, 3rd quarter 2010 (in thousands)

Delta Air Lines $259,473
American Airlines $151,175
US Airways $131,806
Continental Airlines $90,494
*United Airlines $83,872
AirTran Airways $38,139
Alaska Airlines $34,430
Spirit Air Lines $22,939
Frontier Airlines $14,725
JetBlue Airways $15,494

Source: Bureau of Transportation Statistics *United and Continental merged Oct. 1

Read more about the topics in this post: , ,

Companies in this article

UAL Corp.

Read more about this company »

Comments are closed.