American Airlines announced this week that it’s increasing checked luggage fees from $30 to $35, if a customer checks in online, and bumping the charge to $40 if a customer checks in at the airport. The Points Guy reports that JetBlue is doing something similar. The airline has been raising checked bag fees from $35 to $45 for customers who book a flight less than 24 hours before departure (a second checked bag will cost them $60). Alaska Airlines, meanwhile, also raised their price from $30 to $35 in January.
American Airlines said in a press release that this is the first time the company has raised prices since 2018. And while competitors including Delta and United Airlines haven’t raised their standard baggage fees yet (they charge $30 and $35, respectively, for first checked bags), the domestic airlines have a history of following one another’s lead on fees.
The increases come as checked luggage fees have become a crucial part of an airline’s revenue. American Airlines posted a profit of $192 million during the last three months of 2023. This is lower than Delta’s $826 million and United’s $664 million, though Skift reports that this is partly due to its lower international footprint. At American, passenger revenue has been essentially flat and labor expenses are up, as workers including pilots and flight attendants seek pay increases.
JetBlue’s cost increase comes at a time when the airline has been struggling to turn a profit. On top of that, it’s now navigating an appeal of its proposed $3.8 billion merger with Spirit Airlines and Northeast Alliance, which was blocked in January by a federal judge, who ruled it would be anticompetitive. JetBlue also briefly suggested it might back out of the deal, though a hearing is set for this summer.
Airlines increasingly rely on fees for things like seat changes and WiFi to offset costs elsewhere. The Bureau of Transportation Statistics reported that in 2022, airlines made $6.8 billion on baggage fees. And revenue from what’s known as ancillary sales—fees for selecting seats, checking bags, and buying food, to name a few—was projected to reach nearly $118 billion across the industry in 2023. The rising fees can also incentivize customers to join loyalty programs, credit cards, or pay for premium-priced tickets that include checked bag fees, according to the Wall Street Journal.
American is further incentivizing direct bookings from customers by announcing that travelers will soon have to book directly with either the airline or a select group of online travel agencies to earn loyalty-program points. The airline says it will disclose the preferred travel agencies in late April.
While increasing ancillary fees may be inevitable, the government is looking to regulate them. In 2022, President Biden proposed a rule that require airlines and travel sites to be transparent about additional fees customers could be charged, like fees for flight changes, fees for families to sit together, or checking carry-on baggage. In November, the Senate launched a panel to investigate airline fees, including the $4.2 billion that domestic carriers reportedly received for charging for seat selections in 2022. The Department of Transportation says the final version of the Biden administration rule will be issued in April.
