This Airlines globally are on track to score a record $145 billion from additional charges in 2023 fees. Collectively, this enormous sum will comprise over 14% of the industry’s aggregate revenues. This rich new revenue stream has revolutionized the airline industry. Recent occurrences of baggage fees, labor challenges, and other bad behaviors have become a flagship issue for airlines and frustrated passengers alike.
It is evident in the United States even more so. Last year, U.S. airlines pocketed $7.27 billion just from check-in baggage fees. This was an increase from $7 billion in 2022 and a tremendous increase from $5.76 billion in 2019. This growth reflects the airlines’ ongoing strategy to enhance profitability through ancillary fees, which continue to escalate alongside rising operating costs.
The new emphasis on baggage fees has therefore triggered a palpable change in consumer behavior. Kirsty Glenn, the managing director of UK bag manufacturer Antler, noticed an explosive increase in demand. Travelers almost overnight began looking for smaller luggage that fit airlines’ growing carry-on size restrictions. As soon as travelers realize their need to sidestep expensive overage fees, the industry for smaller suitcases has boomed.
Travel journalist Chelsea Dickenson has seen that shifting landscape as well. For example, she has almost a million social media followers alone. Her videos focusing on luggage have turned into a centerpiece of her content creation.
“It feels like a trick,” says 24-year-old Lauren Alexander, expressing frustration over the complexities of airline fees.
As with many other consumer practices, the baggage fee environment changes drastically depending on the airline. IndiGo is an Indian airline, and a successful outlier in an unstable industry. CEO Pieter Eibers says, unapologetically, that they don’t charge a penny in fees for check-in luggage. This approach is a world away from low-cost carriers such as Ryanair. They restrict free baggage to one small personal item that fits under the seat in front of you.
It’s interesting to note that the practice of charging for checked luggage actually started in Europe. UK low-cost carrier FlyBe was the first airline to introduce these kinds of charges back in 2006. Two years later, American Airlines initiated fees for checked bags on domestic routes in the U.S., prompting other airlines to follow suit.
The rapid growth of these often-hidden fees hasn’t escaped the consumer advocacy community’s radar. The European Consumer Organisation (Becu) has already reacted by lodging a complaint to the European Commission. They are taking on airline add-on charges, leaning on a 2014 decision by the European Union Court of Justice to fortify their argument against these practices.
Several European airlines have adopted similar policies concerning hand luggage fees, including EasyJet, Norwegian Airlines, Transavia, Volotea, Vueling, and Wizzair.
“They began to realise that the low-cost carriers were providing very significant competition,” said Jay Sorenson, an industry expert. “They felt they had to do something to meet that.”
The proliferation of these punitive fees has drawn outrage from Americans traveling on our nation’s airlines, as well as from Congress. As one U.S. senator described these fees as “junk fees,” they are an example of the increasing anger from the traveling public.
Pieter Eibers made a point of noting his airline’s operational efficiency to explain why they never adopted baggage fees.
“We don’t want long lines and endless debates at gates about the weight of luggage. We don’t have any of that. We turn our planes around in 35 minutes,” he explained.
The financial success of baggage fees exemplifies a bigger trend in the airline industry. Airlines are looking to raise their profit margins in other ways besides raising base ticket prices. Today, travelers are crossing a veritable pit of hidden fees. That is why industry leaders need to start giving more of a damn about consumer experience than the bottom line, frankly.