Nobody likes checked baggage fees. Nobody, that is, except airline executives. Last year, US carriers made nearly $4 billion from the fees. This year, they are on pace to make even more revenue from baggage fees, all of which avoids a 7.5 percent tax from the Federal Aviation Administration that applies to the ticket price only. Whereas baggage fees used to be included in the price of a ticket, the adoption of checked baggage fees allows airlines to separate the charges.
Lawmakers are now calling for baggage fees to be removed. This summer, Secretary of Homeland Security Jeh Johnson, along with senators including Richard Blumenthal (D-CT), asked airlines to waive baggage fees in order to alleviate the inspection burden at airport security checkpoints. According to them, the cost of baggage fees includes not only the money travelers spend at the check-in counter but also extra time spent waiting in security lines.
Despite the negative consequences of baggage fees, a new study has revealed one positive outcome for consumers. By comparing data from before and after the introduction of baggage fees, a group of business school researchers determined that the fees improved on-time departure performance for airlines. According to their research, the fees have lowered the amount of luggage being processed, and that has improved airport baggage operations. While this might seem like a small benefit, the scale of airline operations means that a few minutes here and there could have a significant impact overall.
To learn more about the economics of baggage fees and how they affect you, watch the video above.