Back in March American tightened its free checked bag allowance for premium cabin customers eliminating the 3rd free checked bag from domestic first class and international business class.
Over the past 8 years checked bag fees have become a huge part of airline revenue. Crucially, while domestic airfares are taxed at 7.5% off the top, checked bag fees aren’t subject to this excise tax, making them an especially attractive tax arbitrage play. While politicians complain about checked bag fees, those fees are encouraged through the tax code.
This also explains why checked bag fees started out primarily domestic. But as airlines go looking for revenue, with few tricks left up their sleeve in a declining revenue environment, they’re spreading more internationally.
American Airlines has updated its checked baggage policy for tickets purchased (or reissued) starting today.
Effective today, several changes to baggage allowances and charges for Mexico, the Caribbean, and South America:
• $25 first checked bag fee now applies to all of Mexico, Central America, and the Caribbean except for Panama City and San Salvador; previous exceptions such as Kingston, Mexico City, Santo Domingo are rescinded
• New $40 second checked bag fee to Guayaquil and Quito
• New $55 seasonal (high season from 7/26 to 8/10 and 12/9 to 12/24) second checked bag charge to Port au Prince, San Pedro Sula, San Salvador, and Tegucigalpa
• New $40 seasonal second checked bag charge to Cali
Here’s something that will make bad checked baggage news go down easier: Watch this sleeping man go round and round on the baggage carousel.