United Becomes First Big US Airline to Increase Checked Bag Fees

At the beginning of the week JetBlue increased checked bag fees to $30 for first bag. At the time I suggested that the larger US airlines were certainly looking at it, but that a major airline especially Delta needed to do it before we could say everyone would.

United turns out to be the large US airline to go first. For North America, Caribbean and Central America itineraries purchased from today onward:

  • $30 first checked bag
  • $40 second checked bag within the U.S., Puerto Rico, Virgin Islands, Caribbean and Central America
  • $50 second checked bag on Canada itineraries
  • $55 second checked bag on Mexico itineraries (no change)

This news comes out on a Friday afternoon before Labor Day weekend. Perhaps that is Josh Earnest’s influence. The airline offered the following statement,

As we continue to make investments that make travel on United better, we are making adjustments to our checked bag fees in select markets – most of which have not been changed for the past eight years. These changes allow us to continue investing in the overall customer experience in today’s marketplace. Customers with MileagePlus Premier status and customers who purchase their ticket with an eligible MileagePlus credit card will continue to receive complimentary checked luggage.

The idea that checked bag fees haven’t gone up in years is a bit beside the point, you’d expect large successful companies to drive down costs and the marginal cost of bag handling is fairly low once the infrastructure for handling bags is in place.

Though I didn’t have a prediction of which US carrier among Delta, United, and American would go first it shouldn’t surprise that it would be United, currently led by a man who never met a fee he didn’t like (including for water). United’s move of course makes it more rather than less likely that others will follow. American in particular will have real explaining to Wall Street analysts to do on its next earnings call if they do not match this increase.

If you’re unhappy with higher checked bag fees bear in mind that they are encouraged by the tax code. The 7% excise tax on domestic airfares doesn’t apply to these fees, so if nothing else United should see a tax savings from moving some revenue out of fares and into fees for domestic flights. So to some extent blame your politicians, not United.

And remember that if you’re an elite frequent flyer with the airline or have the airline’s co-brand credit card you don’t pay first checked bag fees. This creates more of a sense of lock-in, with travel on your usual carrier cheaper (with no checked bag fees) than on another airline even when ticket price is the same. Of course carriers do status match.

United can of course charge what they wish for their product. To the extent the rest of the industry follows it will highlight how homogenized incumbent carriers have become and underscore the need for new business models in the industry to differentiate products, something US carriers vociferously lobby against.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] Those fees have been mostly static in the U.S. for over a decade, to the point where most flyers know what to expect off the top of their head: $25 for the first bag, somewhere between $35 and $55 for the second, depending on what part of the continent you’re going to land in. That’s now changing, as two airlines (United and JetBlue) have announced bag fee hikes in one …. […]

Comments

  1. Gary, do you know how the free-checked bag via a credit card works on the back end? Does Chase pay United some/all of that checked bag fee? If so, you’d think they’d get a say in the cost of increasing this fee.

  2. and yet southwest still bucks the trend and doesn’t charge for the first two pieces of checked luggage. Of course, I still hate their boarding process.

  3. Not surprised they picked Friday before a 3-day weekend to do it. With JetBlue going first, it seems like “easy money” for the Big Three. Of course, somebody might balk, in which case UA might roll it back. Kind of like a fare increase. I’d put the odds of this sticking at 70%.

    One thing about this, though, is that 30 bucks might be too rich for some and they just bring a free carry on and personal item instead. Honestly, 95% of travellers could easily do this if they would just alter their mentality a bit (not feel the need to bring all their worldly possessions with them). So the airlines won’t capture the entire fee increase in profits; they will probably get a few less checked bags. And a few people (not many) might switch to Southwest which has no bag fees. I say “not many” because WN often bakes the cost of bags into their ticket price, so there won’t be much cost savings for these passengers.

  4. @Daniel – Chase pays United for the benefit of offering free checked bags, or at least a portion of the revenue from Chase is booked as marketing revenue inclusive of the checked bag benefits. Chase isn’t being billed retail cost on a per-bag basis, United raising this fee shouldn’t drive up Chase’s costs.

  5. @HawaiiDreaming — Everyone has to make their money somehow. WN often charges higher fares, so the bag fee is baked in. They have to as they’re not really a “low cost” airline anymore. They pay their employees quite well (which is the single biggest variable in airline costs).

    These days, if saving money is your top priority — and you can travel light — you should fly with Frontier or Spirit. They may not be great airlines, but they are the low fare leaders. Southwest doesn’t do that anymore, even though some people might mistakenly believe they do.

  6. Just get a credit card already.

    One annoyance with the card free bag hit me yesterday…I rarely check 2 bags but needed to yesterday. First bag was free from my card. Second bag was $35 2nd bag fee. Thank you aa 🙁

  7. @chopsticks
    Flying out of BNA and BHM, WN is still the lowest cost on a lot of routes. Not as cheap as they used to be, but they sure aren’t priced higher on every route in order to make up for the lack of bag fees. Companion pass, free bags, and no change/cancel fees are hard to turn down in this day and age. I still don’t fly them as much because I have so many AA miles (and an AA credit card for baggage). Sadly, Delta is my favorite domestic airline experience and I burned all of my skypesos a couple years ago.

  8. “The idea that checked bag fees haven’t gone up in years is a bit beside the point, you’d expect large successful companies to drive down costs and the marginal cost of bag handling is fairly low once the infrastructure for handling bags is in place.”

    That’s only if you don’t have an oligopoly…

  9. As a lifetime Plat with AA I still think the answer is near free tickets, big fees for seat selection and huge bag fees. It’s a win, win. Cheap travel for me, low taxes for the airlines and the little people who fly once a year can bake it into the cost of their vacation.

  10. @johhny — There is definitely some truth that inexperienced travelers who feel they MUST travel with lots of stuff subsidize more frequent travellers who have learned the tricks. Heck, every time I get on a Frontier/Spirit flight for $29 (which isn’t that often, but I do sometimes do it) I know that somebody else is basically paying my airfare.

  11. How much more will they charge to take good care of your luggage? This may be profit neutral if they plan to boost ground crew pay to improve customer experience.

  12. Maybe they can use some of that extra money to finally settle my lost bag claim that was submitted over 5 weeks ago…

    United SUCKS

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