How much do airline baggage fees add to the bottom lines of U.S. air carriers? About $3.4 billion last year, up about 24 percent over 2009, according to data released today by the Department of Transportation, which also reported that airlines bagged an extra $2.3 billion from fees charged to change reservations.
The DOT doesn't have overall airline revenues available yet for 2010. But in the third quarter alone, baggage fees amounted to 2.6 percent of revenue for the 21 airlines that charged such fees - $906.4 million out of $35.3 billion in revenue. Reservation-change fees totaled about 1.7 percent of third-quarter revenue.
Of course, the story varies by airline, since the overall numbers include airlines with a variety of practices - including Southwest Airlines, which largely eschews baggage fees and doesn't charge a fee to change reservations.
Delta, the largest carrier, collected 2.9 percent of its third-quarter revenue from baggage fees. For US Airways, the dominant carrier in Philadelphia, third-quarter bag fees totaled 4.1 percent of revenue. And for Southwest? Bag fees - charged only to passengers who check three or more bags - added about 2/10ths of 1 percent of revenue. (Click here to see the DOT data.)
Another point to keep in mind is that the overall fraction of revenue is depressed by passengers who avoid bag fees altogether, as many do by sticking to carry-on luggage. And airlines typically waive the fees for first-class passengers, high-status frequent flyers, and sometimes for other passengers, such as those who purchase tickets with an airline-affinity credit card.
The result is that for individual passengers, baggage fees often add far more than 3 or 4 percent to overall costs. Check a bag each way on a $300 round-trip flight on US Airways, for example, and you'll add $50 in baggage fees - or about 14 percent of your bottom-line $350 fare.
The Inquirer's Linda Loyd wrote last week that baggage fees have helped airlines weather the recent spike in fuel costs better than they did in 2008. So have extra fees that the DOT doesn't track, such as charging for pillows, for seats with extra legroom, and for priority boarding - Southwest's big entry into the nickeling and diming of its customers.
The fees may have helped boost airlines' revenue and their ability to cope with rising fuel costs. But they've also fueled a push for airline-fee transparency by consumer advocates and by Transportation Secretary Ray LaHood. The DOT announced new rules in April that require prominent disclosure of airline fees - plus a requirement that you get your bag fee refunded if the airline loses it along the way.