Airlines are making more money than ever from fees on checked baggage, according to the US Department of Transportation (DOT).
In 2016, airlines collected US$4.2 billion from passengers who paid to check bags, an increase of 10 per cent over 2015. That was a small but growing portion (2.5 per cent) of the US airline industry’s US$168.2 billion in operating revenue for the year.
Airlines also collected US$2.9 billion in reservation change fees, which was a decline from just over $US3 billion generated from passengers paying to make changes in their reservations in 2015. Baggage and reservation change fees are the only ancillary fees reported separately to DOT; other fees, such as for seating assignments and onboard sales of food and other amenities, are combined with other revenue reporting.
Overall, airlines reported operating profits of US$13.6 billion last year, their seventh straight profitable year. After-tax profits were US$9.8 billion, down from US$18 billion in 2015. Airlines said that while their fuel costs dropped last year, labor costs were higher. Net income was lower for both domestic and international operations.
Rising fees for checked baggage and other airline fees were among the topics discussed at Congressional hearings this week focused on concerns about airline customer service and passengers’ rights. CNN reported that airline executives said the fees are a way to keep base fares low, but critics view them as deceptive.
“We’ve heard a lot about pricing today, about fares being lower than they were 25 years ago,” said William McGee, a former airline executive who testified before the House Transportation Committee. “The fact is that obscures fees we didn’t used to pay. Every day there are higher and higher fees. Passengers are getting gouged.”