The History of Airline Baggage Fees

The History of Airline Baggage Fees

In the not-so-distant past, air travel was simpler. You bought your ticket, checked your bags, and boarded the plane. However, the landscape changed when airlines introduced baggage fees, reshaping the way we navigate the friendly skies.

The genesis of baggage fees can be traced back to the early 2000s when airlines faced financial turbulence. Faced with rising fuel costs and economic challenges, carriers sought new revenue streams to stay afloat. Charging passengers for checked bags emerged as a viable solution, providing a financial lifeline for airlines grappling with economic headwinds.

Debut of Baggage Fees

American Airlines made history in 2008 by becoming the first major carrier to introduce checked baggage fees. The announcement came in May of that year. Shortly after, other airlines followed suit, creating a domino effect that reshaped the industry’s economic model. This marked the end of the era where checked bags were included in the ticket price.

Smaller, low-cost carriers such as Allegiant and Spirit had been charging bag fees since a few years earlier. However, legacy carriers would normally charge fees only when passengers needed to check a third bag, or had oversized luggage.

Rationale Behind Fees

Airlines justified these fees as a means of offsetting operational costs, putting a big part of the blame on fuel expenses. In early 2008, fuel prices crossed the symbolic $100/ barrel threshold and reached a new peak of just under $150/barrel in July 2008. That would be $219.07 in 2024, adjusted for inflation.

For comparison, the current spot price of Brent crude oil is $81.73 per barrel. But we still see bag fees going up, with such increases happening at several carriers in recent months.

Another reason for the introduction of bag fees back in 2008 was that by unbundling services and charging for checked bags separately, airlines aimed to offer seemingly lower base fares while allowing passengers to pay for the services they desired.

Fee Structures Evolve

Over the years, baggage fees evolved into a complex structure, with charges varying based on factors like ticket class, loyalty status, and the number of bags. While the initial fees were relatively modest, the industry witnessed a steady increase in these charges.

In 2008, American Airlines charged only a $15 fee for the first checked bag, but that amount has more than doubled in the years since.

The introduction of baggage fees changed passenger behavior significantly. Travelers adapted by embracing carry-on luggage and seeking alternatives to avoid additional charges. Airlines, in turn, continued to adjust their fee structures and policies, leading to an ongoing evolution in the way baggage fees are implemented.

Guru’s Wrap-up

As we navigate the present sky, baggage fees have become a standard aspect of air travel. While they remain a source of contention among passengers, airlines view them as a crucial component of their revenue strategy. Additionally, the promise of avoiding bag fees is a big selling point for airline credit cards. And credit cards, along with loyalty programs, are becoming more and more important airlines.

As travelers continue to adapt to these higher fees, airlines, too, will likely explore innovative ideas and pricing schemes to continue to increase these charges.