Where Does My $25 Go When I Have the Audacity to Check in My Luggage?

Airlines collected $4.6 billion in baggage fees in 2017.

Check_Luggage

Remember when stuff actually came with an airline ticket besides the seat, seatbelt, free magazine, a tiny bit of legroom and a pantomimed emergency demonstration? How spoiled we were, complaining about a mediocre free meal! Along with all the other charges, almost every major airline now makes you pay extra to check a bag (the first two checked bags, at least) — to take the stuff you need on your trip. It’s never fun to pay for something that used to be free, so where does the money from your checked-baggage fee go? Let’s find out.

First of All, Why Are They Doing This?
The reasons given are numerous, and their answers skew along several lines. One explanation is that it offers an overall cheaper ticket to customers who travel light — in other words, it’s cost-effective for us. In this way, different customers can travel at different price points. Another is that it keeps ticket prices steady in the face of rising expenses (like fuel). Another is that it helps pay for better amenities in the cabin, like TV and movies. (Hmmm.) Yet another reason is that it subtly changes consumers’ behavior: If customers bring less stuff, it lowers the airlines’ operating costs.

Why Do They Think They Can Get Away with This?
Basically, because they can! Unless you’ve got hundreds of millions of dollars sitting in your bank account and nothing better to do with it besides starting your own airline, that is. But you’re not alone: According to Martin Lariviere at Northwestern University’s Kellogg School of Management, based on a Consumer Reports survey, customers rank baggage fees highest among the things they hate about flying, even ahead of crying children (no word, though, about crying children with dirty diapers).

What’s the Real Reason for Them, Then?
Lariviere and his fellow professors at Northwestern found that, in the real world, pricing structures for baggage fees don’t actually work the way they should — that is, in an economically ideal way for both the airline and the consumer. For example, business travelers, who often travel light, should ideally pay a low base fare and a really high baggage fee (which they’d only actually pay on the rare occasions they actually have to check a bag), which would be in the best interests of both the business travelers and the airline. Meanwhile, leisure travelers, who likely have lots of luggage, would be best served with low baggage fees while the airline makes money off them in other novel ways.

So why this disconnect? It basically suggests that airlines’ true intentions are to influence consumers’ behavior — to indeed get people to pack less.

Where Does It End?
It’s hard to say, because some airlines have actually considered charging for bathroom use, which sounds like some kind of dystopian nightmare. Imagine paying to use an airline bathroom, which would be a bit like paying to use a dive bar’s restroom, if you’re somehow literally airlocked within said dive bar. Just add baggage fees to the list of things that now cost money: Seat selection; Wi-Fi; entertainment; food (besides salted snacks); beverages (besides water); blankets, etc. It’s all part of airlines’ desire to squeeze every last penny out of customers, no matter if it makes the whole experience of flying even more miserable.

They’re Making Tons of Money off This, Right?
Yes: In 2017, airlines collected $4.6 billion in baggage fees. Also, the tax code exempts ancillary services (like all these add-ons) from the excise tax, which means that airlines don’t get taxed on baggage fees! In other words, unbundling these fees can save them a lot of tax money. But airlines are in the midst of several consecutive years of declining profits, so it’s perhaps imperative for them to look for other ways to make money in this ruthless, shareholder-driven economy of ours.

Why Can’t the Government Get Involved?
Hahahaha… oh, you’re being serious? Well, there have been bills introduced that would ban the practice, but they go nowhere. Even the Department of Transportation is hesitant to look into making sure fees are reasonable, saying that this would take us back to the pre-Reagan-era deregulation days, or something. So, in the meantime, write your congressperson, and try to get by with just a carry-on (although that might be the next thing they try to charge us for).