Airlines Making Billions From Baggage Fees

A huge pile of cash.

Photo credit: Shutterstock

Airlines are making a killing from fees. Last year, U.S. based airlines brought in a total of $4.2 billion from baggage fees alone, according to figures released by the Department of Transportation. That’s a 10% increase from 2015.

Yet according to airline executives, profits aren’t as high as they were in the past, even with lower fuel costs. Airlines reported $13.6 billion in profits total, down 45% from 2015, citing higher labor costs as the reason for the lower figures. Lower passenger fares also attributed to the lower revenue, as ticket sales fell one percent to $124.2 billion.

These lower profits are the main justification for extra fees, not just for luggage but legroom, seat selections, and early boarding to name a few. Airline executives claim these fees allow passengers to choose the kinds of service they want, even though few flyers are fans.

This news comes right as executives from America’s major airlines testified before Congress about their customer service protocols. While this was prompted by last month’s United Airlines debacle, many took the opportunity to vocalize their disdain for airline fees.

William McGee, a former airline executive now representing the Consumers Union, argues that the fees are disingenuous and unfair to passengers.

“We’ve heard a lot about pricing today, about fares being lower than they were 25 years ago,” McGee testified. “The fact is that obscures fees we didn’t used to pay. Every day there are higher and higher fees. Passengers are getting gouged.”

Massachusetts Rep. Michael Capuano agrees that customers are negatively affected by these business practices.

“I go in the computer to try to figure out which flight I want to take. Some charge fees for baggage. Some charge fees for oxygen. Who knows? You can’t get comparable prices,” Capuano said.

As expected, executives from United and American disagreed, saying the baggage fees help keep other costs, such a ticket prices, low.

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About DevonJ140
I am currently an Accounting Director living in New York City. I love reading and learning more about business, finance, tech, and current events.

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