Baggage fees add up to real money

What do $15 here and $25 there add up to in the US airline industry?  Over one BILLION dollars in 2008.  That’s right.  A billion.  With a B.  The carriers do not break out the revenue from checked baggage in their individual annual reports, but the Department of Transportation does require that they report it so we finally got a glimpse into the real numbers there with the release of the Fourth-Quarter 2008 System Airline Financial Data report yesterday.

The numbers overall are rather depressing.  The carriers mostly lost money.  A lot of it.  But in that sea of data there were some bright spots for the carriers.  Like the fact that they collected, as a whole, $498.6MM dollars in baggage fees in Q4 2008.  Because the fees didn’t really start to show up until Q2 2008 we don’t know what the full year impact will really be year over year, but it isn’t too far fetched to think that the $1.1 Billion that we saw in 2008 is soft.  Then again, the whole industry is soft right now so maybe not.

And so, thanks to the fine folks at the Bureau of Transportation Statistics, the numbers are available for our perusal.  The data are available to be broken down by just about any variable out there.  Want to know which carrier had the highest excess baggage revenue in Q3 2008 in the Pacific region?  That data is available (Northwest, by far).  Here’s the summary for the full year system wide:

Airline Excess Baggage Fees ($000)
American Airlines Inc. $ 277,991.00
US Airways Inc. $ 187,081.94
Delta Air Lines Inc. $ 177,063.00
United Air Lines Inc. $ 132,994.00
Northwest Airlines Inc. $ 121,599.00
Continental Air Lines Inc. $ 99,315.00
JetBlue Airways $ 35,307.65
AirTran Airways Corporation $ 29,400.96
Southwest Airlines Co. $ 25,226.00
Alaska Airlines Inc. $ 24,773.00
Frontier Airlines Inc. $ 15,155.82
Hawaiian Airlines Inc. $ 11,627.18
Midwest Airline, Inc. $ 3,977.84
Virgin America $ 2,568.56
Sun Country Airlines $ 1,304.90

Those numbers are in thousands of dollars so American Airlines’s number represents almost $278 Million that they realized all on their own, about 25% of the total in the nation.  If you combine Delta and Northwest’s numbers they actually represent a slightly larger piece of the pie (~$298.6MM) than AA does.  Southwest Airlines, famous for their “no fees” approach to fares managed to pull in about $25MM in fees, thanks to folks paying for overweight or additional bags beyond the first two.  jetBlue seems to be pulling in more money for their Even More Legroom seat up-charges than they are for their baggage fees (first bag is still free on jetBlue), but combined the two do make a pretty reasonable contribution (~$70MM) to the carrier’s bottom line.

For an industry that lost billions of dollars last year these revenue numbers are a bit of silver lining.  The money being taken in is very real and, for some carriers, quite substantial. 

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.