About two years ago I wrote a column predicting that the airlines would soon be charging for luggage. Since then, British Airways started the process with their charges for extra pieces of luggage on their flights, then United Airlines opened the floodgates when it became the first major U.S. carrier to charge for the second checked bag. Now American Airlines has upped the ante with a charge for the first checked piece of luggage.
Will the American Airlines $15 charge for the first checked piece of baggage stick?
My first inclination is to say: of course.
But the changes that this new charge will make to the habits of the traveling public are enormous. The American public feels that checking one piece of luggage is a right that comes with the purchase of their airline ticket. This is one $15 fee that may evoke a negative reaction and cause consumers to book away from AA. I’m not sure whether other airlines will follow.
Every year, almost 700 million air travelers check more than a billion bags. When carry-ons are factored into that tally, it comes to about 2.5 bags per passenger. I reported two years ago that “some industry analysts say that domestic airlines handle as much in luggage weight as they do in passenger weight, and the Transportation Security Administration reports that more than 50 percent of its $6-something billion budget goes to baggage screening.” That all still holds true.
The airlines have long realized that they have a treasure trove here if they could find a way to monetize the luggage they are carrying. Corporate studies have been ongoing for years and boardrooms have tackled the situation regularly. However, only in the last year-and-a-half have the major airlines taken steps to charge for the luggage they used to transport as part of the airline ticket price.
Even amid the howls and protestations of the hoi polloi and commentators, let’s take a look at the updated math of luggage using Federal Express as a guideline. If one looks at the new luggage arithmetic this way, the airlines still appear to a bargain.
The estimated cost of shipping a 50-pound suitcase from Boston to Chicago via FedEx is $231 for delivery the next morning by 10:30 a.m. and $222.63 for delivery the next afternoon. Even second-day delivery is priced at $124. These quotes are for one way.
Now look at the airfares. According to , the least expensive airfare from Boston to Chicago for flights a month in the future costs $226 round trip. That’s almost exactly the same price as shipping a suitcase one-way on FedEx either next morning or afternoon delivery. (Note: with AA your luggage is “same-day delivery” and travels conveniently with you.)
With a promotion like “pay to ship one piece of luggage to Chicago and the passenger flies for free” the airlines would actually make more money based on the FedEx guidelines.
I realize that this kind of comparison isn’t exact. However, in round numbers it indicates the costs associated with moving luggage — not to mention moving luggage together with passengers. Indeed, the airlines need to figure how to unlock the potential riches of charging for luggage.
I don’t think this AA initiative is the way to move in that direction and that it will create more problems than it solves. The devil will be in the details.
- This luggage fee is a step too far. AA will eventually have to back off of the fee.
- Problems with controlling carry-on luggage will increase exponentially.
- Delays at TSA checkpoints will increase as more passengers bring more baggage through the inspection points.
- Delays at the boarding gates dealing with luggage arguments will further delay AA flights to less than a 50 percent on-time rating.
- Other airlines will adopt a wait-and-see approach to this dramatic fee increase, forcing AA to rethink their fee structure.
- The Transportation Department will force airlines to disclose these fees in their advertisements. This will allow other airlines to simply raise airfares without raising the total advertised cost of the trip. AA will eventually (perhaps before June 15) roll this fee into their airfares.