U.S. airlines take in less from luggage fees, but 4Q profit up
FORT WORTH — Airlines are collecting less money from bag fees than they did two years ago, but are making up for it by adding extra charges to a slew of amenities, including getting a decent seat.
The government reported Monday that U.S. airlines took in $3.35 billion from bag fees in 2013, down 4 percent from 2012. That is the biggest decline since fees to check a bag or two were instated in 2008.
The bag-fee figure was part of information released by the Department of Transportation, which said that airlines earned $7.3 billion in the fourth quarter of last year, reversing a loss of $188 million in the same period of 2012.
Fees on checked bags, reservation changes and other services have become a larger share of airline revenue and a big reason why the carriers are making money.
Airline revenue from bag fees — much of it for large or overweight bags — was modest during most of the last decade.
In 2008, financially strapped American Airlines expanded the fees to checking a regular bag or two, and other carriers soon matched the move.
That year, the industry's revenue from bag fees more than doubled, then doubled again the next year, and rose again in 2010.
Sixteen leading airlines reported figures that contributed to these findings.
Bag-fee revenue peaked at $3.49 billion in 2012 before falling last year.
As bag-fee revenue levels off, airlines are already looking for new sources of money.
Delta said recently that other fees such as charging extra for priority boarding, economy seats with more legroom, and upselling to first-class grew to $165 million in the first quarter of 2014, a 20 percent increase in one year.
Delta President Ed Bastian said the airline believes it can boost that figure to $500 million a year in the next three years.
At Dallas-Fort Worth International Airport, some passengers game the bag-fee system by rolling their bag through security to the gate, then checking it there, where there is usually no fee.