Airline Fees Could Reach $9 Billion

Billions in Airline Fees

U.S. Airlines collected almost $5.7 billion in fees baggage fees and reservation change fees in 2010, and it's estimated the figure will rise to about $9 billion when other charges are calculated including fees for pet transport, in-flight snacks, Wi-Fi and more.

No big surprises in the baggage fee figures; the latest airline financial data from the Dept. of Transportation shows that airlines made more money than ever from those irritating bag fees. Revenue was up more than 20% in 2010 compared to the previous year.

Domestic Airline Baggage Fees:

  • 2010: $3.4 billion
  • 2009: $2.7 billion

An even sharper comparison can be seen by viewing data from 2007, when most airlines did not charge a fee for a first or second checked-bag (though there were fees for overweight or oversized luggage); bag fees from 2007 to 2010 increased a whopping seven-fold!

The equally irritating reservation change fees also rose from 2007 to 2010, but by a much more modest factor of 2.5. And look at the most recent figures: change fees for 2010 actually declined over the year before:

Domestic Airline Reservation Change Fees

  • 2010: $2.3 billion
  • 2009: $2.4 billion

The Southwest No Fee Factor

The reason for the decline in change fees might be attributed, at least in part, to what I'll call the "Southwest Factor".

First of all, according to the passenger data, the number of domestic fliers in 2010 increased by about 10 million over 2009, and about half of those passengers flocked to Southwest. That airline, of course, does not charge a "change fee" and it also gives customers two checked-bags for free.

Another factor may be the weather; airlines have become increasingly pro-active when it comes to waiving change fees in the face of storms that are expected to delay or cancel flights.

Baggage Fee Creep

Meanwhile, the continued growth in bag fees for the other carriers can be attributed, for the most part, to "bag fee creep". For instance, American Airlines, which was the first legacy carrier to introduce a first checked-bag fee, initially priced it at $15 back in 2008. By the summer of 2009, the airline raised that fee to $20, and by Feb. 2010, it jumped again to $25.

Airlines and Military Baggage Fees

Bag fees were in the news recently when several airlines were criticized for charging members of the military fees for 3rd and 4th checked-bags, but this was not the first time the issue made headlines.

Back in 2008, American Airlines changed its military baggage policy after some criticism to began allowing military members to check three bags for free. After this latest media firestorm, some airlines increased military their baggage allowance to include four free bags, while American now has one of the most generous policies, which allows servicemen and women five checked-bags for free.

Rick Seaney
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