In the eyes of many, JetBlue, a beloved airline for years, fell from grace at the end of June when it began charging for checked baggage. What was once free is now $20 if purchased online, and $25 at the check-in counter. With that move, Southwest became the last major United States airline offering free checked bags on domestic flights.
A survey of 17 countries found that 81 percent of passengers checked one or more bags in 2014. SITA, a multinational airline and air transport technology company that surveys the airline industry and passengers regularly on a variety of issues, says that amounted to 3.2 billion checked bags in the air worldwide last year.
Airlines operate on slim margins, so an increase of $20 for 8 out of 10 customers makes a big difference. Airlines make an average profit of just $11.61 per customer, according to SITA.
There is usually no fee to check a bag on international flights, but airlines can make a lot of money from fees for checked bags on U.S. domestic flights. Some $3.5 billion in baggage fee revenue was collected by U.S. airlines in 2014, according to the U.S. Department of Transportation. Meanwhile, less than 1 percent of bags were improperly handled last year, but that's still around 24 million bags worldwide. Dealing with those bags came at a cost of around $2.4 billion, according to SITA, which is actually an improvement. In 2007, some 46.9 million bags were lost, at a cost of $4.22 billion.
The main reason for delayed bags is mishandling during flight transfers—passengers move from one plane to another but their bag does not. Within the mishandled 1 percent of bags, 14.3 percent are mishandled— i.e., damaged or their contents are pilfered—and another 5.5 percent are lost entirely or stolen. Reuniting a person with a lost bag takes an average 1.6 days.
Though baggage loss is rare, it's extremely frustrating and can cause customers to switch their preferred airlines. So can sky-high ticket prices. JetBlue's average fare is $166.57, so an extra $20 amounts to a 12 percent fare increase.
The decision might please JetBlue's investors on Wall Street, but the rest of us might take a flight on Southwest.
