IdeaWorksCompany Press Release ─ Page 1
Global Bag Fee Revenue Rises to $33.3 Billion
CarTrawler 2023 Global Estimate of Baggage Fee Revenue reveals
15% increase from 2022 figure of $29 billion.
Dublin, Ireland & Shorewood, Wisconsin, 20 February 2024:
IdeaWorksCompany, the foremost consultancy on airline ancillary revenues, and
CarTrawler, leading global B2B provider of car rental and mobility solutions to the
travel industry, recently estimated ancillary revenue at $117.9 billion worldwide for
2023. This CarTrawler Global Estimate of Baggage Fee Revenue identifies
baggage as a $33.3 billion component and provides a summary of baggage fee
policies for 20 top airlines.
Each year IdeaWorksCompany analyzes the ancillary revenue disclosures for
airlines all over the world. These results are applied to a larger list of carriers (which
numbered 122 for 2022) to estimate ancillary revenue activity for the world’s airlines.
Baggage activity for each category of airline is included in this analysis to calculate a
global estimate. It’s a significant component of ancillary revenue and consists of
three primary sources: checked baggage in the aircraft hold, added fees for heavy
and extra-large bags, and for some, the price charged for larger carry-on bags.
Commenting on the findings, Aileen McCormack, Chief Commercial Officer at
CarTrawler, said: "The CarTrawler Global Estimate of Baggage Fee Revenue
highlights the shifting dynamics of airline revenue streams. Baggage fees, once
dominant, now share the stage with assigned seating revenue, reflecting changing
consumer behaviours. It is encouraging to see that global baggage fee revenue is
almost $1 million ahead of 2019 pre-covid levels.
IdeaWorksCompany Press Release ─ Page 2
“At CarTrawler, we recognise the importance of tailored ancillary revenue strategies
aligned with each carrier's brand position. We build customised technology solutions
for car rental and mobility while prioritizing the customer booking experience."
Baggage fees for the first piece checked are a regular revenue source for airlines in
Europe, North America, and Latin America. For global network carriers, these are
typically associated with “basic economy” fares; for low cost carriers (LCCs),
baggage fees are typically charged to all consumers. The table below lists the bag
fee policies for 20 top non-low cost carriers.
Summary of Economy Class Baggage Fee Policies
Top 20 Non-Low Cost Carriers
Airlines
Based in:
Top 20 Carriers
General Policy
Where Fees Apply
All Fares
Include
Baggage
Fee or Free
Determined
by Fare *
Transatlantic
Asia / Pacific
Air China
Cathay Pacific
Korean Air
Qantas
Singapore
Europe
Air France/KLM
Fees apply network-wide
British Airways
Fees apply network-wide
Lufthansa
Fees apply network-wide
Scandinavian
Fees apply network-wide
Turkish
Middle East
Emirates
Etihad Airways
Latin America
Avianca
Fees apply network-wide
LATAM Airlines
Fees apply network-wide
North America
Air Canada
Alaska Group
Fees apply network-wide
American
Delta
Southwest
United
Data source: Airline websites reviewed by IdeaWorksCompany January 2024.
* Lower fares, such as basic economy, don’t include baggage (not all markets have these fares).
** Typically includes flights within the US, Canada, Mexico, and Caribbean region, and flights within
Europe and the Mediterranean region. Minor fee waiver exceptions may exist for each carrier, and
are often due to local regulations which require the inclusion of a checked bag for all fares.
IdeaWorksCompany Press Release ─ Page 3
Fees for checked baggage first started as an economic necessity for traditional
airlines seeking relief from a dramatic jump in fuel prices during the oil shock of 2007
and 2008. Within a matter of months, major carriers in the US went from including 2
checked pieces with every fare, to charging for the first bag checked by travelers.
Since then, fees for checked baggage have been adopted by airlines all over the
world. However, as shown in the table above, traditional airlines in Asia include a
checked bag with all passenger fares (the same is true in Africa). US carriers are
surprisingly reluctant to add bag fees to all long-distance routes. Transatlantic
routes are the exception where bag fees are very prevalent. Baggage fees also
have become one of the criteria used to define the category of low cost carriers.
Revenue from baggage fees long represented the single largest ancillary revenue
category. However, this began to change during the pandemic when traditional
airlines embraced fees for assigned seats. This had been accepted practice for
LCCs for a decade; the speed at which global network carriers added these fees has
been surprising. Sitting near the front of the cabin, for earlier deplaning upon arrival,
became a matter of personal choice and safety during the pandemic. Likewise,
choosing an extra leg room seat became an attractive way to create more personal
space. Both habits continued through the end of the pandemic, and global revenue
from assigned seating may now very well compare to the $30+ billion generated by
baggage.
Consumers have reacted to bag fees by wanting to carry more bags into the cabin to
avoid charges. Travelers love the convenience of carry-ons, and even load up the
cabin on airlines that don’t charge for checked bags. For all airlines, from global
network carriers to LCCs, this has become an operational challenge and customer
pain point. Many carriers limit carry-ons to 7kgs (15 pounds) and allow an additional
personal item such as a purse or laptop bag that can fit under the seat.
Basic economy fares have become a tool used by global network carriers to
compete with LCCs through a no-frills offer. This has prompted some airlines to
further tighten carry-on policies to encourage consumers to upgrade from lowest
basic economy price to a less-restrictive economy fare. For example, consumers
buying basic economy fares on Avianca, Etihad, LATAM, SAS Scandinavian, and
United are limited to a personal item as their only carry-on. Enforcing this policy can
be a challenge; United requires basic economy travelers to check with a counter
agent at the airport before receiving a boarding pass.
LCCs encourage consumers to pay for checked bags and have enjoyed success
here. Global network carriers now know that capturing this revenue requires more
effort than originally anticipated. The reluctance of carriers in some regions of the
world may reflect an admission of these difficulties. Perhaps the industry is nearing
the limits of borrowing from the LCC playbook of a la carte fees. Or maybe it’s an
acknowledgement that changing long-established baggage policies can create
unattractive branding and operational outcomes. Ancillary revenue should never
represent a one-size-fits-all solution in which all carriers seek to maximize profits by
merely copying every element of the LCC model. Rather, a carrier must first define
its brand position and then design an ancillary revenue strategy to fit that role.
IdeaWorksCompany Press Release ─ Page 4
The data presented in the table on page one of this press release is available as a
JPG image file at the press release section of the IdeaWorksCompany.com website.
Disclaimer: IdeaWorksCompany makes every effort to ensure the quality of the
information in this report. Before relying on the information, readers should obtain
any appropriate professional advice relevant to their particular circumstances.
Neither IdeaWorksCompany nor CarTrawler guarantee, or assume any liability or
responsibility for, the accuracy, currency or completeness of the information.
About CarTrawler: CarTrawler is the leading global B2B provider of car rental and
mobility solutions to the travel industry. Recognised for its innovative technology
solutions, CarTrawler is the partner of choice for the world’s leading travel brands,
enabling them to offer car rental, airport transfer and ride-hailing services to their
customers. CarTrawler’s purpose is to drive successful partnerships, by creating
substantial ancillary revenue opportunities for the travel and airline industry.
Founded in 2004 in Dublin, Ireland, CarTrawler’s proprietary technology platform
connects customers to more car rental options than anyone else in the world. Their
team of in-house experts designs, builds and powers tailored software solutions
which are easily integrated into partners’ websites and intuitive to use. Developed
over 18 years, CarTrawler’s innovative, bespoke and data-led solutions have proven
conversion rates and measurable returns.
CarTrawler’s global network connects more than 50,000 car rental locations
worldwide, working with the biggest industry players including United Airlines,
American Express Travel, easyJet, Uber, Hotels.com and Emirates. Find out more
at cartrawler.com.
About IdeaWorksCompany: IdeaWorksCompany boosts airline profits through
innovations in ancillary revenue, a la carte pricing, loyalty marketing, and airline
retail. The firm was founded in 1996 and has an international client list of airlines and
other travel industry firms in Asia, Europe, the Middle East, and the Americas.
IdeaWorksCompany enjoys a reputation as a global resource for ancillary revenue
strategy, on-site executive workshops, and research reports. Learn more at
IdeaWorksCompany.com.
Contacts:
IdeaWorksCompany CarTrawler
Jay Sorensen, President Powerscourt: [email protected]
1-414-961-1939 Eavan Gannon on +353 87 236 5973
jay “at” ideaworkscompany.com Kelli O’Malley on +353 86 083 3258