American Airlines, unsurprisingly, has matched its main competitors and said it will soon start charging $30 for the first checked bag, a day after Delta followed JetBlue and United to up the charge from $25 to $30.
The Dallas-based carrier also followed the lead of other airlines in justifying the rate hike, saying that it’s a necessary to recoup a steep increase in the cost of jet fuel, which has risen by more than 30% in the past year. On most carriers the charge for the second checked bag is also rising, from $35 to $40. And airlines also are raising the price of changing a ticket – in JetBlue’s case, it’s rising from $150 to $200.
But with the country’s largest airline now on board, the airline stampede to raise the cost of checking bags and other ancillary services is getting some unwanted attention in Washington. Airline fees have become a hot button issue on Capitol Hill, where a proposal to give the Department of Transportation power to determine whether airline fees are reasonable has been included in sweeping legislation to re-authorize the Federal Aviation Administration for five years. The bill is expected to come up for a vote soon, and the timing of the latest rash of fee hikes could give this provision fresh momentum.
Airlines are furiously lobbying to quash the move, with the carrier’s trade group, Airlines 4 America, arguing that it would effectively re-regulate the industry for the first time in 40 years. An official there was recently quoted as calling the proposal “an existential threat to our business.”
And there are still some airline hold-outs; Southwest, as usual, sticking to its role of the maverick – it continues to allow customers to check up to two bags free of charge, and it says it has no plans to change that policy. Even though Alaska and Hawaiian haven’t yet made a decision, the move still means that most passengers will pay more for ancillary services. Low-cost carriers like Allegiant, Frontier and Spirit are already among the most fee-happy carriers in the country.
Adding to the debate is new evidence that airlines are increasingly relying on fees, rather than straightforward fare increases, to cover costs. According to federal government statistics, last year the U.S. airlines raked in $4.6 billion in bag charges, and nearly $3 billion in change fees.
A report from the Ideaworks Consulting firm shows how much U.S. airlines make from these fees; in the U.S., for example, Spirit Airlines reported that 47% of its revenues come from ancillary charges, and for most mainstream airlines like Delta and United, it’s more the range of 13% to 15%. By contrast, major international airlines are less dependent on the fees; British Airways, for example, only gets 5% of its overall revenue from ancillary charges.