Airline Baggage Fees Reach $2.6 Billion

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Business school professors and airline analysts will look back on the first three quarters of 2010 and say that the industry finally found a way to make money. Baggage fees for the period hit nearly $2.6 billion. That numbers is up from $464,000 in the same period in 2007, according to the Department of Transportation.

Delta (NYSE: DAL) was the industry leader with baggage fees of $733 million in the first nine months of this year, followed by American Air (NYSE: AMR) at $431 million, Continental at $258 million and United at $239 million.

Southwest Air (NYSE: LUV) which does not charge for baggage, brought in only $22,000 in fees

Customers do not like fees, but unless they can fly Southwest they cannot avoid them.

The airline industry finally caught on to the fact that it had lost money for decades for a number of reasons which include high fuel and labor costs. It never occurred to the industry that the way to offset costs and boost profits was to charge passengers for nearly everything they do. Meals are no longer free on most flights. There is a charge for movies and other entertainment. Airlines have begun to charge for the better economy seats. The cost of drinks, both alcoholic and non-alcoholic, has risen. Carriers have begun to  add new service like WiFi and the charge for these also adds to revenue.

Passengers look back at the days when almost everything that airlines did for them was free. It made flying pleasant, but it also helped push a lot of carriers either out of business or into Chapter 11.

Douglas A. McIntyre

Airlines ranked by year-to-date baggage fee revenue, dollars in thousands (000)

Rank   1Q 2Q 3Q 4Q Year-to-date
1 Delta Air Lines 217,773 255,950 259,473   733,196
2 American Airlines 128,539 152,059 151,175   431,773
3 US Airways 120,720 135,601 131,806   388,127
4 Continental Airlines 76,603 91,031 90,494   258,128
5 United Airlines 71,145 84,824 83,872   239,841
6 AirTran Airways 35,005 39,204 38,139   112,348
7 Alaska Airlines 21,166 25,394 34,430   80,990
8 Spirit Air Lines 16,033 16,811 22,939   55,783
9 Frontier Airlines 13,872 15,470 14,725   44,067
10 JetBlue Airways 13,763 14,012 15,494   43,269
11 Allegiant Air 14,826 14,437 13,747   43,010
12 Hawaiian Airlines 11,672 13,523 15,060   40,255
13 Virgin America 7,328 9,124 10,177   26,629
14 Southwest Airlines 6,872 7,923 7,729   22,524
15 Republic Airlines 6,418 6,366 5,193   17,977
16 Horizon Air 762 5,293 6,702   12,757
17 Sun Country Airlines 3,971 2,406 3,059   9,436
18 Mesa Airlines 539 731 980   2,250
19 Continental Micronesia 585 813 773   2,171
20 USA 3000 Airlines 954 819 391   2,163
  All Airlines 768,546 891,791 906,358   2,566,695

Source: Bureau of Transportation Statistics