United Airlines is raising checked bag fees for flights purchased April 3 onward by $10 for travel in the U.S., Mexico, Canada and Latin America.
- First checked bag fee goes up $10 to $50
- This is discounted by $5 if prepaid at least 24 hours before departure (when you might not have packed yet and might pay for an extra bag you don’t use)
- This is a $10 increase.
This week United’s BFF and possible acquisition target JetBlue led this round of bag fee increases (as it commonly does).
Once JetBlue went first it wasn’t surprising to see another airline match. And now that United has done it we can expect to see more follow.
Of couse, moving more of the total fare into fees saves the airline taxes. The 7.5% excise tax on domestic airfares does not apply to fees. So this is tax arbitrage as well as an attempted fare hike. Congress encourages ever-increasing checked bag fees because of the disparate tax treatment that they receive.
Customers with United and Star Alliance elite status, as well as co-brand credit card customers, continue to receive their standard checked bag fee waivers.
UA really wants to you to get their cc.
In Canada taxes are charged on bags
I’m surprised none of the Big 4 have pushed to get a lower excise tax in exchange for it covering essentially everything that’s part of an airline trip, especially Southwest when they didn’t have bag fees. It wouldn’t have taken much to figure out what percent would be revenue-neutral to the government.
Would have slightly reduced he excise tax burden for the big carriers but likely hit the ULCCs pretty hard as they have a much larger portion of their tickets as incidentals, likely shaving 3ish points off the ULCC operating margins.
And, Gary, when these for-profit corporations come begging to Congress, this time, we really must include meaningful consumer (think US-261, Rule 240 at least) and worker protections as part of that inevitable bailout… however, seeing who’s in charge, it’ll probably just be another smash and grab by our oligarchs. Pathetic.