June 22, 2015 1:13 pm

U.S. airlines collect record amount from bag fees

Lower fuel prices combined with higher baggage fees are boosting airline industry profits.

AP Photo/Nam Y. Huh, File
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NEW YORK – U.S. airlines continue to collect record fees from passengers who check suitcases or make changes to their reservations. In the first three months of this year, airlines took in $1.6 billion in such fees, up 7.4 per cent from the same period last year.

That’s the highest amount for the first quarter since bag fees started in 2008, according to data from the Bureau of Transportation Statistics. Those months are traditionally the slowest for air travel.

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These add-on charges, along with falling jet fuel prices, helped U.S. airlines post a combined $3.1 billion in profits during the first quarter.

That was a net profit margin of 8 per cent, a significant jump up from the 1.3 per cent margin in the year before.

For their part, Canadian airlines are benefiting from new baggage fees as well. Air Canada introduced new bag fees on economy fliers in November, a move preceded by WestJet weeks earlier.

“We think these are important drivers of the business model, and they’ve been accepted broadly in the U.S. and in other parts of the world, as well,” Air Canada CEO Calin Rovinescu said in May.

 

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