- American, JetBlue and Alaska have all raised baggage fees this year.
- Carriers have changed the price to check a bag depending on whether travelers pay for it in advance or at the airport.
- Airlines and other companies have been grappling with how to grow profits while reining in costs, such as new labor contracts.
It’s a don’t care fee for those that make the airline money. Most of the economy travelers are once a year leisure travelers with zero brand loyalty and only buy based off of the cheapest fare, sometimes coupled with convenience.
The $5 fee doesn’t impact their purchase because it’s not in the base price. And if they’re truly cost conscious, they’ll do carryon, board in Group 4, and have it gate checked for free.
The 2023 numbers from Q4 agree with the consensus. For United it’s about the same as the other’s in the Big 3 (United, Delta, American). 12% of the passengers are business class (domestic “first” since US carriers don’t have first class) and they make between 75% and 80% of the revenue. For a 100 seat plane, which is like an Embraer that means the 12 butts up front make 80% of the money for United while the 88 butts in steerage class make 20% of the money. That’s 6.6% of flight revenue per business class passenger and 0.23% per economy pax.
The business class passenger is therefore 28x more valuable to United just on revenue. The business class passenger also will usually have more brand loyalty, they will choose a flight even if more expensive or worse routing, to fly with the airline because. Maybe just because. Maybe perks. But it doesn’t matter to United.
If you fly United business class you get 2 free bags. It doesn’t affect those United cares about.
Within the economy sections 20% of revenue over 10% of those are basic economy super duper cheap fares that are zero bags, also doesn’t affect them.
And additionally, the Big 3 airlines aren’t airline companies anymore. They are credit card banks that operate flying buses. That’s the most profitable and the most valuable asset (literally) that they have. It’s what the airlines even borrowed against during COVID as guaranteed collateral. If you sign up for the United credit card, you become valuable to United, and guess what?! No checked bag fees!
So all in all, this is a nothing burger that affects very few people, and United doesn’t give a crap if it does. If you want to be treated better, cough up the dough.