Back in the spring of 2008, FareCompare reported on a brand new development – a first checked-baggage fee on a U.S. legacy carrier – by asking somewhat breathlessly, “What are they thinking??”
Five years later, the question seems naïve. The airlines were simply thinking of new ways to raise revenue. And the fee scheme has been wildly successful.
Listen as travel expert Rick Seaney explains his simple money-saving strategy:
American – First Checked-Bag Fee
Once American Airlines instituted a $15 fee for a first checked-bag in May of 2008 – a fee that has since been raised to $25 – air travel expert Rick Seaney predicted other airlines would “hang back a bit and let AA take the heat for a while [but] eventually, they too will charge a first bag fee” and he was right. By July, almost all the other legacy carriers had joined in (Delta would add the fee in November) and most of the smaller airlines such as Virgin America also followed suit.
More Fees Follow
Today, only JetBlue and Southwest offer free first checked-bags (and Southwest gives its customers a second checked-bag for free as well) but the trend is clearly going in the other direction. Some U.S. airlines now charge for carry-on bags as well though this is proving less popular and is currently seen only at Allegiant, Spirit and for some passengers on Frontier (and these airlines also charge for such minor amenities as coffee and soda).
But worse than baggage fees in the view of many are the sky-high change fees for altering itineraries or canceling travel plans which can run into hundreds of dollars per ticket and these fees are popular with the airline. Today, only Southwest does not charge a change fee.
Airlines Rake in Billions from Fees
As noted, these fees add up to a significant revenue stream: Last year, airlines around the world raked in more than $27 billion in various fees, with United Airlines bringing in more than $5 billion alone. With the high cost of fuel, it’s one way to become (or remain) profitable without raising airfare prices to the point that it sours passengers’ demand for travel.
Are Passengers Used to Fees?
For younger travelers, fees for bags and ticket changes are all they’ve ever know. But these additional costs still annoy veteran passengers who remember the days of fee-free flying. Tell us what you think about fees and whether they’re fair – or not.