How Airlines are Changing the Baggage Game. Who is the Winner?

How Airlines are Changing the Baggage Game. Who is the Winner?Airlines in the U.S. collected nearly $5 billion in baggage fees last year. The cost of ancillary services in airline travel continues to rise, of which baggage plays a pivotal role. Though premium classes remain largely unaffected, passengers purchasing low-cost fares are taking an increasing financial hit as economy carriers create more complex pricing schemes, causing business travel planners to struggle to keep costs in check.

While baggage fees comprise 3% of total revenue for U.S. carriers, they make up a much higher portion of revenue for discount airlines like Spirit and Frontier, which rake in 19% of their income from baggage fees. Low-cost carriers are increasingly upping the ante, with a growing number of carriers worldwide now charging for carry-on baggage.

Understand the Baggage Game

Airlines aren’t exactly pocketing the nearly $5 billion in fees that frustrate budget-conscious customers. They are being leveraged by the airlines in tax arbitrage. The excise tax of 7.5% applied to domestic airline tickets doesn’t apply to the fees for your travel event, allowing airlines to reap significant tax savings, keeping hundreds of millions of tax dollars in their coffers.

Despite rising ancillary charges, passengers aren’t paying more for travel overall. Ticket prices typically fall with rising baggage fees. Instead, baggage fees are being used to secure traveling costs that would have previously been part of airline fares. However, this has pushed many travelers to carry-on baggage, slowing the boarding process, and increasing operating costs.

Alternatives for Checked Baggage

For those tired of being nickel-and-dimed at purchase or suffering the heavy financial penalties of dimension or baggage weight problems at the airport, there are alternatives. To prevent baggage costs from eclipsing ticket prices, try these cost-saving luggage alternatives:

  • Carrying on a duffel
    Cramming items in a carry-on is often the solution of choice for travelers eager to escape exorbitant checked baggage fees. These soft-sided bags are the most forgiving carry-on, with flexible fabric built for stuffing items within.
  • Shipping baggage
    For those that don’t want to lug baggage through the airport, battle the screening process, or go through the inconvenience of checking-in and seeking out checked baggage, luggage shipping services may offer an ideal solution. Unlike parcel services, luggage shippers specialize in the shipment of belongings to lodgings and hotel rooms. It often costs more than checked baggage, however, it saves time and hassle.
  • Sending yourself a package.
    The best travel management companies know mailing your luggage via UPS, FedEx, or USPS is often a more affordable alternative. Shipping one suitcase or luggage box, and costs will be about on par with carry-on baggage rates for economy airlines. If you’re checking heavy luggage or bringing multiple bags, however, you’ll see significant savings. Just be sure to plan ahead. Shipping rates vary by proximity to your travel destination, with average shipping times of 2-3 days.

Business traveling expenses adding up? Uncover cost saving travel solutions with the help of GTI Travel today.