There used to be a time when the price of a ticket included all on-board services: the choice of a seat, food and drinks, plus at least one checked-in baggage. The reality these days is very different. Most basic economy tickets, (especially the ones that are not overseas or booked with low-fare companies) do not include much more than the possibility to be transported from one location to the other with a small personal item in the cabin.
In the 70s and 80s, most services (food, baggage, leg room) were bundled together and included in the airfare. According to Simple Flying magazine, in the 1970s ticket prices were high enough for airlines to offer generous baggage policies to all travellers. Then came the internet, which empowered customers by offering the possibility to compare prices within clicks. As flights became more accesible, airlines faced a new challenge: how to carry so many bags.
Technology changes led to the advent of baggage policies, where travellers, based on the type of ticket they bought, could bring one or two bags with a maximum weight. European low-cost carriers came around with the idea of charging for any checked luggage.
The way in which airfares evolved has had a wide set of effects. Companies such as Ryanair introduced the idea of “no frills” travelling, which brought down the price of travelling and in turn caused an increase in the number of people who fly, and who fly more often. Some studies have shown that reducing the number of checked bags (charging fees works as a counter incentive to check in bags) cuts the time it takes to get bags on and off planes. This in turn results in fewer flight delays.
A side effect of the availability of fare information on the internet was that competition became tighter and airlines found it difficult to raise fares above rivals without suffering a drop in demand. This is a major reason why airfares have become much cheaper over time. Airlines looked for ways to increase their revenue stream. That’s one of the main reasons why they charge for the extras.
In the US, airlines found an interesting loophole. They realised they could get a portion of the transportation cost out from under the base airfare so that it is not subject to the government’s 7.5% excise tax on tickets. The 7.5% federal excise tax on domestic tickets applies to airfare and not to ancillary services.
American Airlines introduced fees for all checked bags in 2008, reports Simple Flying magazine. They realised that ancillary fees from bags could help it offset high oil prices without raising fares and angering all passengers. Checked bags on domestic flights became only available in premium cabins or flexible economy fares. In 2018-19, US carriers brought in $4.9 billion from luggage fees alone. American Airlines brought in $1.2 billion, with United following with $888.7 million and Delta at $778 million.
In the aftermath of these changes, many passengers have complained, especially in Europe. Consumer associations and organisations have also joined the cause and encourage passengers to report these charges.
EC Regulation 1008/2008, whose article 22 paragraph 1 allows companies to freely set the fees for air services but does not detail the price tariff in relation to baggage; and also in relation to article 97 of the LNA where companies are obliged to carry hand luggage without any additional cost. “The carrier shall be obliged to transport together with the passengers, and within the price of the ticket, the luggage with the weight limits, regardless of the number of packages, and volume set by the Regulations”, therefore, hand luggage that the traveller carries is not considered luggage.
The airline may only deny boarding of this baggage if they consider that it violates the security measures derived from the weight or size in relation to the dimensions of the aircraft.
This issue has already been addressed by the Court of Justice of the European Union (CJEU), which stated that everything is related to the distinction between checked and unchecked baggage. The checked baggage is the one that travels in the hold and which is considered a non-essential service, so that companies can charge you for its transportation. On the other hand, there is the unchecked baggage, or hand luggage, which is considered an essential element for air transportation and therefore the company is obliged to transport it at no cost or supplement to the initial price of the ticket.
Commercial aviation went through a difficult two-year period because of the pandemic. Several airlines had to request state aid or went into deeper debt. As international travel restarts, air companies will continue to look for ways to increase their revenue so the ancillary fees will not go away any time soon. Airlines will strive to maximize the number of passengers onboard will keeping the weight at its minimum.