Senate Bill Will Require Airlines to Refund Checked Bag Fees if the Airline Loses Your Bag

by Gary Leff

About 8 years ago airlines started charging for checked bags that they used to transport as part of a ticket.

In addition to whatever incremental revenue they may earn from doing so, they discovered a huge incentive in tax arbitrage: the more money they move out of “the ticket” (which is subject to a 7.5% excise tax) and into “ancillary revenue” (which is not subject to this tax) the better off they are financially. Roughly speaking each of the largest US airlines is pocketing $50 million a year in tax savings by charging you for checked bags.

Delta and Alaska Airlines actually offer you promises in exchange for checking bags with them. Delta will give you 2500 miles if you’re a SkyMiles member and your bags aren’t delivered within 20 minutes off a domestic flight. Alaska, which pioneered the offer, will give you 2500 miles or $25 towards a future flight.

The Senate’s FAA reauthorization bill will require that airlines to refund bag fees if they take your money for a checked bag and then don’t provide the service — either not delivering your bags on time or at all.

This component of the legislation, though, may not wind up in the House version of the bill. Current FAA authorization runs through July 15, and if the House and Senate cannot both path the same bill before then we may see another three month extension.

I prefer a world in which airlines do compete on these policies.

  • This takes away some of the advantage of a Southwest which doesn’t charge for checked bag fees at all.

  • United’s and American’s approach worse than Alaska’s and Delta’s.

  • If getting hosed by airlines that charge checked bag fees and then don’t deliver the bags in a timely manner matters to you, then don’t buy American or United tickets.

However only being able to keep money for services you actually perform is a very reasonable principle. I’d still far prefer the federal government stop incentivizing airlines from charging checked bag fees in the first place!

Watch this sleeping man go round and round on the baggage carousel.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  2. This is purely about taking money for a service (transporting bag from A to B) which is not delivered. This should not require a specific law – it should fall under general law.

  3. During my employment with United Airlines, I observed how horrible United treats passengers. I had seen older people and young kids, traveling alone, crying and under so much stress that did not have credit cards or cash to pay for the luggage fee.
    United Airlines people have no forgiveness and they will charge for a checked bag, no matter what. Even if they have to cancel someone’s flight and cause so much drama.
    Plus, the company informs employees on newsletters, how much money they make from these ancillary fees.
    I have the AA branded Barclay’s credit card. I was charged for a bag at least 3 times, this past year because agents do not know that the card, comes with a free checked bag and they argue about this.
    On my recent flight from Las Vegas to NYC, a nasty agent name Blossom, threatened to cancel my flight if I did not pay for the luggage. I kept telling her that my bag should be included with the card. My bag was literally one pound over the weight also and she said if I did not pay for the extra baggage fee on top of the bag fee I was not going to fly. So, I obliged and paid.. American Airlines staff at airports are just simply disgraceful.
    I complained to a manger at the gate, instead of him giving me a better seat, I tore my boarding pass and said that he was going to write me up to the company! How Rude? Both United and American are very disgraceful.

  4. Actually, the checked bag fees have lots of unintended consequences, namely the battle of the overhead bins with the excess carry-on situation that results from this policy. And I agree about the tax incentive being wrong. However, I travel with only about 25 pounds of carry-on luggage at most. I never check. I’m not sure how I come down on this one. I guess for those of us who travel light we are being rewarded by not paying the fees. I have status so I wouldn’t be paying even if I did check bags.

    The airlines should refund checked bag fees if your luggage is late, stolen or lost. Can’t imagine why this needs to be legislated. And about those nasty agents, I’ve learned through years of experience to take a deep breath, count to ten and be as pleasant as possible in all matters concerning these folks. It’s easier said than done but I found it gets the best results from bad situations.

  5. I just don’t think the view of competition that your tend to espouse exists in the USA domestic market given the consolidation and geographical division that has gone on around the country. Maybe an LAX flyer can choose among competing airlines based on things like bag reimbursement policies, but for the PHX, EWR, ATL, etc. flyer, competition has been so dramatically dampened by consolidation and by the major airlines’ decision to carve up rather than compete nationwide that minor market differentiation doesn’t move the needle anymore.

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