IdeaWorksCompany, a consultancy that analyses airline ancillary revenues, and CarTrawler, a global B2B provider of car rental and mobility solutions for the travel industry, have in a recent study estimated that airline ancillary revenues reached $117.9 billion worldwide by 2023.
Record baggage revenues
This worldwide estimate from CarTrawler estimates that baggage packages alone generated 33.3 billion dollars. The analysis covered a list of 122 airlines. Commenting on the results, Aileen McCormack, Chief Commercial Officer at CarTrawler, said: "The CarTrawler Global Estimate of Baggage Fee Revenue highlights the changing paradigm for airline revenue streams. In the past, baggage fees were the main source of additional revenue. Today, baggage fees are on a par with revenues from assigned seats. This reflects changes in consumer behaviour", he analyses.
Baggage revenues hit an all-time high last yearThis will exceed baggage receipts for 2019. These totalled 29.2 billion dollars.
First checked baggage fees have become a regular source of revenue for airlines in Europe, North America and Latin America. Passengers must now pay for their checked baggage on basic economy fares.
Asia and Africa are escaping this phenomenon - for the time being in the vast majority of cases. On low-cost airlines, baggage charges are generally billed to all passengers.
Checked baggage fees first appeared as an economic necessity for traditional airlines following the surge in fuel prices during the oil crisis in 2007 and 2008. In the United States, for example, airlines first decided to offer only one piece of free baggage instead of two. Then to charge for all checked baggage. This solution has been adopted by almost all airlines.Southwest excepted.
Cabin baggage, a new source of revenue
Consumers have reacted to the imposition of hold baggage fees by wanting to carry more cabin baggage. The idea is to avoid additional costs.
The response has been swift. Airlines have been introducing increasingly restrictive measures on cabin baggage for a decade. Many carriers limit hand luggage to 7 kg and allow an additional personal item such as a handbag or travel bag to fit under the seat..
This is an effective formula that scheduled carriers are also adopting by offering an air fare without baggage. By tightening the basic conditions, many carriers hope that passengers will end up taking a more expensive fare, including a baggage option..
Passengers will continue to pay more and more for their baggage. The unit cost continues to rise, both in the hold and on board. United, for example, has just increased its baggage fees by 5$ at the end of February.. Not to mention the exorbitant costs often applied to any additional baggage. The only hope at least for European passengers. EU legislation could put an end to the taxation of certain cabin baggage. To be continued.
