The cost of checking a suitcase when flying is increasing.
Some major airlines, such as American Airlines (AAL), Alaska Airlines (ALK), and JetBlue (JBLU), have reportedly increased their costs by $5 to $10 per bag over the past few months, with rates already reaching $45. Additionally, Southwest Airlines (LUV), one of the airlines that had long defied industry convention by not charging for checked baggage, recently declared that it will start doing so on May 28. However, the precise amounts have not yet been disclosed.
All of this occurs at a time when airlines are preparing for what may be a challenging 2025, given that consumers may be reluctant to travel due to financial worries. Due to a drop in travel in the first quarter of 2025, American Airlines retracted its full-year guidance earlier this week. Additionally, based on its observations over the last two months, Southwest stated that it was bracing itself for decreased demand.
During an earnings call this past week, CEO Bob Jordan stated, “Of course, the big topic on everyone’s minds right now is the macroeconomic environment,”
However, travel industry analysts stated that worries about booking losses were likely unrelated to the changes in baggage-fee laws and taxes. This is due to the fact that such adjustments were probably being considered long before airlines began to consider the potential of those declines.
Regarding the date, travel influencer John DiScala, also known as Johnny Jet, stated, “I think it’s coincidental.”
According to experts, baggage revenue is a valuable source of income for airlines, particularly low-cost carriers who rely on every dollar of traveler spending.
According to data from the Bureau of Transportation, the amount of money that airlines collect each year has increased dramatically since they began charging baggage fees more than 15 years ago. In 2023, the most recent year for which full data is available, the total among the major U.S. carriers increased from $1.1 billion in 2008 to just over $7 billion.
Additionally, according to one statistic, the total amount of money received from luggage fees by carriers worldwide is $33 billion.
According to one estimate, legacy carriers may only receive 2% to 4% of their total revenue from passengers checking their luggage, but they undoubtedly enjoy the additional money they receive. However, it can reach 20% with those low-cost carriers.
During the earnings call, Jordan of Southwest did not specifically address how luggage fees may counteract any possible travel declines, but he did state that the “transformative initiatives we have rolling out the rest of this year and into 2026…should provide a significant benefit.”
However, given that passengers have traditionally favored Southwest due in part to the airline’s lack of baggage taxes, several analysts warn that the tactic may backfire.
“They’re risking something… “People might search elsewhere,” stated Katy Nastro, a representative for the online vacation agency Going.com.
However, there are ways for travelers to avoid having to pay those annoying luggage fees. Even while branded credit cards frequently have an annual fee, it’s pretty usual to fly for free if you have elite status with an airline or have a branded credit card via them.
Another strategy, according to Aktarer Zaman, CEO of the travel website Skiplagged, is to just be a wise consumer and search for lower prices. In actuality, the savings on the ticket may exceed the luggage fees charged by each carrier by a significant margin.
“Focus on the lower base [fare] and everything else should be okay,” he stated.
