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.