American Airlines packs profits with baggage fees
DALLAS — American Airlines made more than $350 million by charging baggage fees between April and June, blowing past records after raising rates a year ago.
U.S. airlines combined charged $1.5 billion for baggage in the threemonth period, despite hundreds of cancellations due to the grounding of the Boeing 737 Max line of jets March 13, according to data released Monday by the U.S. Bureau of Transportation Statistics.
Fort Worth-based American managed to boost its baggage fee revenue by 12 percent during the second quarter. Atlanta’s Delta Air Lines boosted bag fee revenue by 42 percent to $288 million.
Bag fees continue to be a major revenue source for airlines and a growing one, particularly after raising fees last year. American followed suit with Delta and United a year ago by increasing fees from $25 for the first checked bag to $30, and from $35 to $40 for the second bag.
In all, U.S. air carriers charged about $264 million more for bags during the second quarter of 2019 than they did during the same period a year earlier, before the increased bag fees hit.
“We haven’t hit the breaking point yet where travelers are not willing to pay for bags,” said Christy Rodriguez with Upgraded Points, a travel and credit card-tracking website.
Even Southwest Airlines, which lets passengers check two bags for free, saw baggage fee revenue grow 2.4 percent to $13.7 million.
American Airlines continued to lead carriers for the most revenue from baggage fees with $350 million during the period and $668 million so far this year. Delta was second with $288 million and United was third with $275 million, all increases over the year before.
Government data released Monday included financial statistics showing revenue for U.S.based airlines was up about $2.4 billion in the second quarter, despite trying times with the grounding of Boeing’s new class of 737 Max jets that still haven’t received clearance to fly again.
Revenues from baggage fees have increased consistently since being introduced in 2008.
Ultra-low-cost carriers such as Allegiant and Spirit have shown the bigger airlines that customers aren’t spooked by a la carte fees, Rodriguez said.
Spirit is able to charge the most per passenger, with about $26.61 in baggage fees for every flier, according to a recent study by Austinbased Upgraded Points. In comparison, American brings in just under $10 a passenger in baggage fees.