Baggage fees continue to soar

Despite actions taken by both the Biden and Obama Administrations decrying nickel-and-dime charges and urging a return to straightforward, all-inclusive pricing, the travel industry seems intent on giving the middle finger to both the government and the traveling public. This latest report on the escalation of baggage charges is a prime example.

Before I dive into that, let me explain. The essence of both actions from the two administrations is that nickel-and-dime charges – whether for checked baggage, seat selection, so-called resort charges at hotels, or service charges for concert tickets – effectively hide the all-in price of whatever is being purchased and make comparison shopping difficult to impossible for consumers.

Under the Biden Administration, the Fair Trade Commission (FTC) proposed the “Trade Regulation Rule on Unfair or Deceptive Fees” in November 2023 that would require merchants to publish an all-in price upfront but otherwise does not address airlines’ ancillary revenue sources. As of this writing, "This [is] just a proposal and the Commission will now review the comments and assess whether or not to move forward with the proposal, amend the proposal or table the proposal," an FTC official told TheTravelPro in an email.

The 16-page report titled “The Competition Initiative And Hidden Fees” issued in the final days of the Obama Administration concluded: “All actors – policymakers at all levels of Federal and state government, the private sector, and researchers – need to build on the actions of Administration and seek to mitigate or eliminate the growing use ‘hidden fees’ across a number of industries.”

The latest information about the growth in baggage fee revenue came in a breathless email from IdeaWorksCompany, which bills itself as “the foremost consultancy on airline ancillary revenues.” It said its annual Global Estimate of Baggage Fee Revenue reveals a 15 percent increase from the 2022 figure of $29 billion.

This Global Estimate of Baggage Fee Revenue identifies baggage as a $33.3 billion component of recently estimated ancillary revenue of $117.9 billion.

Regarding the above graphic, bear in mind that the "As a % of Global Airline Revenue" includes airlines that levy baggage charges as well as those that do not. A more meaningful metric is the percentage of each individual airline's revenue that is derived from baggage fees and other ancillary charges.

Perhaps surprisingly, the summary of baggage fee policies for 20 top “non-low-cost carriers” show that seven of them include baggage with all their fares and do not charge separate fees. Among North American carriers, Southwest Airlines (NYSE:LUV) is the only one that does not levy baggage charges. Of the others, fees may or may not apply depending on destination, the fare purchased, whether the traveler carries the airline’s affinity credit card, and other factors.

Carriers based in Asia/Pacific and Middle East regions generally include baggage with all fares. Those carriers include Air China, Cathay Pacific, Korean Air, Qantas, Singapore and Emirates. At Etihad, the other Middle East carrier, baggage fee or fee-free is determined by the fare the traveler selects.

Unsurprisingly, the report notes that, “Consumers have reacted to bag fees by wanting to carry more bags into the cabin to avoid charges,” and adds that “Travelers love the convenience of carry-ons, and even load up the cabin on airlines that don’t charge for checked bags.”

However, it also notes that increased carry-on luggage has become an operational challenge and customer pain point. Who among us who has flown recently hasn’t noticed at least one person who needs help either stowing their carry-on, retrieving it at the end of the flight, or both? And the number of carry-ons means it takes longer to board and deplane than it would otherwise.

What I find puzzling – and infuriating – is that consumers continue to allow businesses of all sorts to thumb their noses at both the government and their customers, despite reports that consumers are fed up with these charges. The FTC’s web page about the proposed rule cites “Consumer Reports' 2018 WTFee?! survey” which “found that at least 85 percent of Americans have experienced a hidden or unexpected fee for a service in the previous two years, and 96 percent found them highly annoying.”

And yet, we continue to tolerate this nonsense.

In some cases, we have few choices. Depending on where you need to fly, you may not have the option of an airline that doesn’t charge baggage fees or fees for choosing your seat in advance. So we may not always be able to vote with our dollars, but we surely can – and SHOULD – be on our legislators to at least force businesses to be transparent about these costs and at best, make them illegal.

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