Airlines ride record year for baggage fees to profits
New York • U.S. airlines collected more than $6 billion in baggage and reservation change fees from passengers last year the highest amount since the fees became common five years ago.
Passengers shouldn't expect a break anytime soon. Those fees along with extra charges for boarding early or picking prime seats have helped return the industry to profitability.
Airlines started charging for a first checked suitcase in 2008 and the fees have climbed since. Airlines typically charge $25 each way for the first checked bag, $35 for the second bag and then various extra amounts for overweight or oversized bags.
The nation's 15 largest carriers collected a combined $3.5 billion in bag fees in 2012, up 3.8 percent from 2011, according to the Bureau of Transportation Statistics. Fees for changing a reservation totaled $2.6 billion, up 7.3 percent.
The airlines took in $159.5 billion in revenue last year and had expenses of $153.6 billion, according to the government. That 3.7 percent profit margin comes entirely from the baggage and change fees.
The government requires the airlines to report revenue only from baggage and change fees.
Passengers can expect to pay even more this summer.
American Airlines, Delta, United Airlines and US Airways all recently raised the fee for changing a domestic flight reservation from $150 to $200.
Even Southwest Airlines, which promotes its lack of change fees and "bags fly free" policy, recently announced a new policy on no-shows. Passengers who buy the cheapest tickets will have to cancel a reservation before departure; otherwise they won't be able to apply credit from the missed flight toward a later trip.
Many fees were first introduced to allow airlines to offset rising fuel costs. In 2008, jet fuel spiked 46 percent, to an average $3.06 per gallon as the price of oil hit an all-time high.
Airfares have climbed in recent years but jet fuel remains costly in 2012, the airlines paid an average of $2.96 a gallon. Passengers have shown reluctance to book tickets if the base fare is too high, hence the introduction of more fees collectively referred to in the industry as ancillary revenue.
Besides baggage and change fees, airlines are charging fees for extra legroom, the ability to skip security lines and for premium meals.
But the airlines are being aggressive about expanding those fees. United recently said in an internal newsletter that it hopes to collect $19.29 in average ancillary revenue per passenger by the end of 2013, up 9.1 percent from the amount it collected last year. JetBlue, which doesn't charge for the first checked bag, took in a record $22 per passenger in other fees in the first quarter, up 3 percent from the year-ago quarter.
Delta, Spirit at top
Delta Air Lines took in the most fees $865.9 million from baggage alone, but it also carried more passengers than any other airline. Low-cost carrier Spirit Airlines collected the most per passenger, an average of $19.99.