Is Your $25 Bag Fee Only Worth 2 Bucks?

That is the question Time magazine asks in its report that the $25 checked-baggage fee (the price charged by most airlines) only costs carriers about $2. Is this true? Not exactly, but you might be paying more than the service is worth. There’s a reason for that, too.

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Why a $25 Fee is Supposedly Worth $2

The Time article cites analysis by the Detroit Free Press which says when airlines began charging for bags back in 2008, they cited the high cost of jet fuel, and yes, oil was high – in July of 2008, it climbed very close to $150 per barrel. Currently, it hovers below the $100 mark, plus today’s planes have lighter weight gear – including iPads instead of the old heavy pilot manuals, lighter drink carts, and in some cases, lighter aircraft – all of which leads the Free Press to conclude that a checked-bag only costs an airline about $2 in fuel costs. But there are other factors in play.

Airline fee chart: See what your carrier charges

Other Costs that Add to Fees

This would include the human factor – yes, there are still people who have to handle the bags – and there are all the intangibles that go into employee salaries, plus the space the bags take up and more. Just compare the $50 round-trip checked-bag fee with the cost of sending a 50 lbs. box via FedEx and it might seem a relative bargain. Or it would, if we hadn’t gotten used to getting checked bags for free.*

*Note: Two U.S. airlines still give you checked-bags for free – JetBlue and Southwest.

Airlines rake in billions in fees

The Real Reason Behind Airline Bag Fees

A funny thing happened once passengers began paying baggage fees: The airlines started making money. Tons of money. And they began adding more fees for once-free amenities like snacks and pillows and blankets. Then they created new fee-based options such as the go-to-the-head-of-the-boarding-line fee. And oh how the money poured in. In 2012, for example, five U.S. airlines pulled in more than $1 billion in total fees, each. Fees have become revenue.

That’s not necessarily a bad thing, either. Without those fees, some of those airlines may have gone under or at least gone into bankruptcy. And as air travel analyst Rick Seaney has noted, “A shuttered airline can’t take you anywhere.” And as much as we may hate fees, in the current era of the mega-merger, passengers can use all the airline competition they can get to help keep ticket prices down.

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Published: February 5, 2014