American Airlines raises its bag fees as airline charges continue to creep higher
Refreshing TikTok packing hacks… Bad news for your vacation outfit plans: American Airlines is hiking its fee to check a bag at the airport by 33% to $40 for domestic flights. Airlines tend to follow the leader with bag charges, and American’s move follows similar hikes this year by Alaska and JetBlue. The rise of the much-hated fees has resulted in some creative solutions, like shoving pants into travel pillows or donning fishing vests bulging with electronics.
Cash in cargo: Airlines made $33B+ from luggage fees (think: checked bags, overweight charges) globally last year, a 15% spike from 2022. Luggage made up about 4% of total airline annual revenue.
Turbulent: Thanks to surging airfare prices, most airlines haven’t raised luggage fees for years (American said it last hiked its checked bag charge in 2018). Airfares are expected to be cheaper this year as the travel boom cools, sending fees to the runway.
At least ice is still free… The aviation industry made $118B last year from “ancillary” offerings like premium seats, checked bags, and on-flight cheese boxes — an 8% increase from 2019’s record. At the same time, carriers like Delta have become less generous with frequent flier perks like airport lounges and status points. The extra charges have attracted the attention of the Biden admin as it battles junk fees: the Department of Transportation is expected to release a final version of new transparency rules around airline fees next month.
Fees keep customers loyal… For airlines, fees aren’t just direct money-makers. They also steer fliers toward their loyalty programs and lucrative credit cards (most major US airlines offer complimentary checked bags to their card holders). That’s paying off: Delta’s loyalty revenue grew 22% last year as consumers charged nearly 1% of total US GDP to Delta’s American Express cards alone.