Airline Baggage Fees : The Airline Industry’s Financial Salvation?

Note: This is a cross-post from Steven Frischling’s Flying with Fish blog. Steven Frischling, aka: Fish, is a self employed photographer, and founder of The Travel Strategist, who has flown approximately 1,000,000 miles since he began to track his mileage 2005.
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Throughout the past year airlines have suffered massive financial losses due to record high fuel prices, a weakening global economy and declining demand for airline seats.

In an attempt to increase their financial stability many airlines in the United States, and around the world, turned to the ancillary revenue generated by charging passengers for their baggage.   As angered as passenger have been regarding the checked baggage fees they have helped major airlines in the United States collect more than US$1,145,385,850 in revenue during 2008…and baggage fees weren’t even initiated by most airlines in the United States until the middle of the second fiscal quarter of 2008.

The fourth fiscal quarter of 2008 saw airlines pull in US$498,600,000 alone!

Checked baggage fees have always provided a significant revenue source for airlines, however prior to the past year this revenue was for excess baggage and overweight baggage. Airlines that do not allow any free-checked baggage, such as American Airlines, now consider all baggage on domestic flights to be ‘excess baggage.’

Airlines that allow passengers to check baggage at no fee, such as Southwest Airline and its policy to allow up to two pieces of baggage at no charge, still generate financial benefits of excess baggage fees. Southwest Airlines raked in US$25,226,000 in baggage fees during 2008, or approximately US$69,112.32 per day.

American Airlines, the first ‘Legacy’ airline to begin charging for all checked baggage brought in US$ 277,991,000 in baggage fees in 2008.  To break this down, American Airlines’ baggage fees bring in approximately US$761,619.17 daily from passengers checking bags.

Two months ago I addressed baggage fees here, 28/03/2009 – Checked Baggage Fees : Will They Go Away? Can You Avoid Them? , and stated I that I thought baggage fees were here to stay.  Looking at the overall baggage free revenue break down I am now absolutely sure these fees are here to stay.

Wonder how much your airline earned in 2008 collecting baggage fees?   Check out the info below from the US Bureau of Transportation Statistics.

American Airlines (AA): US $ 277,991,000
US Airways (US) : US$ 187,081,940
Delta Air Lines (DL)** : US$177,063,000
United Air Lines (UA) : US$132,994,000
Northwest Airlines (NW)** : US$121,599,000
Continental Air Lines (CO) : US$99,315,000
JetBlue Airways (B6) : US$35,307,650
AirTran Airways (FL) : US$29,400,960
Southwest Airlines (WN) : US$25,226,000
Alaska Airlines (AS) : US$24,773,000
Frontier Airlines (F9) : US$15,155,820
Hawaiian Airlines (HA) : US$11,627,180
Midwest Airline (YX) : US$3,977,840
Virgin America (VA) : US$ 2,568,560
Sun Country Airlines (SY) : US$1,304,900

**Delta Airlines & Northwest Airlines are now one airline, operating as Delta Air Lines, under the airline designator “DL”

With airlines earning roughly US$3,138,043.42 daily from baggage fees, do you think we’ll see them go away any time soon?

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Shashank Nigam

Shashank Nigam

Shashank Nigam is the CEO of SimpliFlying and a globally sought-after consultant, speaker and thought-leader on airline branding and customer engagement strategy. He is also the youngest winner of the Global Brand Leadership Award and has addressed senior aviation executives globally, from Chile to Canada and from Sydney to San Francisco. Shashank's perspectives have found their way into major media outlets, including CNN Travel, CNBC, MSNBC, Bloomberg UTV, Mashable and in leading publications like Airline Business, ATW, Aviation Week, and others. Shashank studied Information Systems Management and Business Management at Singapore Management University and Carnegie Mellon University. Hailing from India, he splits his time between Singapore and Vancouver, among other cities.
Shashank Nigam
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Showing 3 comments
  • Oussama Salah
    Reply

    i suppose from a financial point of view the accountants think this is the greatest thing ever.
    Basicaly the Majors decided that what they could not carry out efficiently, they will just pass its cost again to the consumer,
    So what, Low Cost Carriers do it all the time, well I got news for you most LCCs don’t do it all the time, LCCs control their cost and maximise their revenue, something which is apparently alien to the Majors. So what is next to stay, catering, clean airplanes, pillows, blankets or maybe a reversion to the good old days when we used to pay for earphones to watch a movie.
    Apparently, all the thinking and cost that went into creating a brand of the customer friendly airline that provides to its passengers a more enjoyable journey, has been for nothing,
    All these surcharges are symptoms of the Majors’ failure to control cost, failure to innovate and failure to manage staff. It has been the same for the last 30 years and it starting to unravel. A new business model is needed to make this work.

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