Congratulations America, You Gave Airlines $7.1B In Baggage And Change Fees Last Year

Image courtesy of TheeErin

For the better part of the last decade, airlines have been tacking on fees for everything from checking bags to allowing customers to cancel or change their flights. While spending $25 now and then for the convenience of not dragging your bags around the airport might not break the bank, those fees add up — to $7.1 billion. 

That’s according to a newly released report [PDF] from the U.S. Government Accountability Office that examined impact of airlines increasing optional service fees over the past six years.

While airlines have introduced a variety of new fees for optional services and existing fees over the past decade, the GAO report focuses on changes to checked baggage fees and change/cancellation fees.

According to the report, the revenue for 11 U.S. airlines made from these two fees increased from $6.3 billion in 2010 to $7.1 billion in 2016.

Specifically, baggage fees increased 12% from $3.7 billion in 2010 to $4.2 billion in 2016. Reservation change and cancellation fees increased 14% from $2.5 billion in 2010 to $2.9 billion in 2016.

In all, these fees made up 3.3% of airlines’ operating revenue in 2010 and 3.5% of revenue in 2016.

Why The Increase?

The GAO notes that the increase in revenue from baggage and cancellation and change fees can be partially attributed to an increase in passenger traffic.

Total passenger traffic for airlines in the U.S. increased 14% from 721 million travelers in 2010 to 825 million travelers in 2016.

Still, the report suggests that the increase in revenue from these fees also comes as airlines have “unbundled” airfare. Airline officials tell the GAO that this was done in order to allow passengers to customize their flights by paying only for services that they want.

Additionally, airline officials said that charging fees for optional services allows the airlines to offer lower base airfares to customers.

However, the GAO found that might not actually be the case.

Baggage Fees

In the case of baggage fees, GAO’s review of airlines showed that on average customers who paid for at least one checked bag paid more in total for the airfare and bag fees than they did when airfares included checked baggage.

The report found that of the five “network” airlines — Alaska, American, Delta, Hawaiian, and United — only Alaska increased its checked baggage fee from $20 to $25 over the past seven years.

However, Hawaii and Delta each eliminated a previous checked baggage discount of $3 that was provided to travelers who paid for checking bags online before arriving at the airport.

When it comes to low-cost carriers, the GAO found a different story.

Frontier, Spirit, and Allegiant each increased the fee range for first and second checked bags during this timeframe. The airlines charge varying baggage fees based on when the passenger pays the fee; specifically, paying a bag fee online and in advance of the flight is less expensive than paying the bag fee at the airport on the day of travel.

While the fees for first and second checked bags remained fairly stable, the GAO reports that more than half of the airlines examined increased charges for overweight bags. In 2010, overweight bag fees ranged from $50 to $175, and in 2017, they ranged from $30 to $200.

As for oversized bags, GAO found that six airlines increased the fees, while other narrowed them. For example, Delta changed between $175 and $300 for an oversized bag in 2010, while it switched to a flat fee of $200 for the bag by 2017.

In 2010, oversized bag fees ranged from $35 to $300, and in 2017, they ranged from $75 to $200.

Changing Or Canceling The Reservation

Baggage fees weren’t the only optional costs increasing for airlines. Six of the airlines examined by the GAO increased cancellation and change fees from 2010 to 2017.

In 2010, the airlines charged from $50 to $150 to change or cancel a domestic reservation; in 2017, this fee ranged from $50 to $200.

Of the five network airlines, the GAO found that each increased their fees from 2010 to 2016.

American, Delta, Hawaii, and United each increased the fee $50, while Alaska increased its fees between $25 and $50.

Low-cost carriers also increased fees. Allegiant increased its fee $25 for each segment; Frontier either increased or decreased its fee depending on travel from $50 to $100 to a flat $99; JetBlue’s fee went from $100 to a range between $75 and $150.

Southwest Airlines does not charge a change fee, while Spirit decreased its fees from a range of $100 to $110 to $90 to $100. Sun Country also decreased its charge from $75 to $50.

To confuse matters even more, some airlines’ change fees apply only to one segment of the trip, not the entire booking. For this reason, it is important to read up on your chosen airline’s policies.

The Future

The GAO report points out that the DOT has taken or proposed a range of actions to improve the transparency of airlines’ fees for optional services.

For instance, the DOT has taken steps to increase monitoring and enforcement of airlines’ compliance with existing transparency regulations; collecting, reviewing, and responding to consumers’ complaints; collecting additional data on revenue generated from fees; and educating airlines and consumers about existing regulations and consumer rights related to optional service fees.

Still, the agency notes that more could be done. To that end, the DOT has ongoing regulatory proceedings.