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How airline fees have turned baggage into billions (18-minute audio)

June 4, 2025

BBC World Service

From extra bags to choosing a seat, airline passengers are faced with an array of extras, for a fee. And stricter limits for luggage in particular have turned ‘compatible’ suitcases and bags into big business. From bag manufacturers, racing to design the next travel bag innovation, to the travel influencers building audiences by sharing money-saving packing hacks. But what do passengers think about it all?

Presenter: Sam Gruet

Producer: Megan Lawton

Click here to listen to an 18-minute program from the BBC.

How airline fees have turned baggage into billions (article)

June 4, 2025

BBC World Service

There was a time when checked bags, seat selection and your meals all came as standard on commercial flights. But that all changed with the rise of the budget airlines, says Jay Sorensen of US aviation consultancy IdeaWorks. It was in 2006 when UK low-cost carrier FlyBe became what is believed to be the world’s first airline to start charging passengers to check in bags. It charged £2 for a pre-booked item of luggage, and £4 if the customer hadn’t paid in advance. Other budget carriers then quickly followed suit, with the so-called flag carriers or established airlines then also doing so, at least on shorter flights. In 2008 American Airlines became the first US airline to charge a fee, $15, for the first checked bag on its domestic routes. Mr. Sorensen says such traditional airlines felt they had no choice when they “began to realise that the low-cost carriers were providing very significant competition.” He adds: “They felt they had to do something to meet that.”

Frequent Flyer Study: Award Ticket Prices Are Soaring—Except At American Airlines

March 13, 2025

View from the Wing

Jay Sorensen’s IdeaWorks is out with their annual study of airline frequent flyer award pricing, and he has interesting findings after making 1,200 flight searches in February 2025 for travel during between June and October. Looking at the cost of domestic roundtrip bookings with a Saturday night stay for one passenger, the report finds that award price inflation (36% since 2019) is much worse than inflation in the broader economy (24%). Compared to last year’s study results, though, all airlines charged fewer points on average for a ticket. American AAdvantage redemptions have actually got 21% cheaper in this category over the last six years. The airline has said a key component of their strategy has been offering a more compelling rewards program than competitors.

Why do airlines keep adding new fees?

January 3, 2025

Radio Canada

According to data compiled by IdeaWorksCompany, 56.4% of Spirit Airlines ‘ revenue came from ancillary fees in 2023, making it the global leader. Alberta-based Flair follows a few ranks below, earning 40% of its revenue from surcharges it charges for things like baggage and seat selection.

“The introduction of ancillary fees has been a big financial success for airlines,” says Jay Sorensen, president of IdeaWorksCompany. “I would also say it’s been very good for consumers, because by unbundling services, travelers can choose what they want,” he adds. This à la carte offer would allow the most minimalist customers to pay as little as possible.

Airlines are pushing ancillaries to boost revenue, but new offerings slow to come

October 11, 2024

PhocusWire

Last year, total airline revenue exceeded pre-pandemic results hitting $918 billion, according to the recently published 2024 CarTrawler Yearbook of Ancillary Revenue. Ancillary services played a role in that growth, with passengers increasingly willing to pay for options to personalize their experience – elements such as more legroom, early boarding or checked baggage. According to the CarTrawler report, 57 airlines together saw a $7.4 billion rise in ancillary revenue in 2023, a more than 25% increase over 2022 – which was already up 50% over 2021.

Report: 2023 Ancillary Airline Revenue ‘Surges’ Over ’19 Levels

September 25, 2024

Business Travel News

The airlines with the most ancillary revenue in 2023 collected $54.1 billion, which “is far in excess” of the $38.4 billion result for the top 10 carriers for 2019, according to a new IdeaWorksCompany report, released Tuesday. The company used financial statements, annual reports, analyst research and investor relations presentations for 68 airlines to produce the 2024 edition of the CarTrawler Yearbook of Ancillary Revenue. Among those, 57 carriers appeared in last year’s publication and were used in year-over-year comparisons.

Southwest’s free checked bag policy was just put into question

July 27, 2024

San Francisco Chronicle

The research firm IdeaWorks estimated recently that airlines worldwide bring in annual baggage fee revenues totaling $33.3 billion and noted that Southwest is the sole outlier among major U.S. carriers in not charging them. Federal statistics show that in 2023, baggage revenue was $1.3 billion for American, $1.2 billion for United, and $985 million for Delta.

Driving growth with airline ancillaries

June 10, 2024

Mastercard

In late 2023, travel industry firms CarTrawler and The IdeaWorks Company projected that airline ancillary revenue would increase to $117.9 billion worldwide for 2023. That would represent a 275% increase over ancillary revenues in 2013, which were $31.5 billion. While ancillaries are growing overall, ancillaries per passenger ticked down in 2023 significantly. In 2024 and beyond, airlines will focus on maximizing ancillaries per person. Although other factors such as increases in average ticket price can influence customer behavior, it’s important to keep a special focus on ancillaries.

United is making a digital-advertising push

June 7, 2024

Crain’s Chicago Business

Traditionally, advertising hasn’t been much of a focus for airlines, says Jay Sorensen, president of IdeaWorks, a consulting from outside Milwaukee that tracks ancillary revenue. “Every once in a while, I’ll come across a carrier making a big push on this,” he says. “They tend to come and go. It’s not an easy thing. They’ve got to be really dedicated to have it work. I haven’t seen airlines do it well for a sustained period.”

How airline “drip pricing” can disguise the true cost of flying

April 24, 2024

CBS News

Jay Sorensen, president of IdeaWorks, a consultancy that has advised U.S. airlines, agrees that drip pricing makes comparing airline ticket prices more complicated. But he still thinks it can benefit consumers by letting them pay for the extras they want, while leaving behind those that aren’t important to them. “The outcome is of course that it’s more difficult to compare between different products and airlines,” he said. “While that’s true, airlines, as profit-seeking companies, are under no obligation to make it easier to compare with their competitors.” Sorensen compared the experience of booking airfare today to shopping for groceries. “You roll in with your shopping cart, and as you walk through the aisles you toss stuff in your cart,” he said. “You buy a base fare, and as you go through the booking path you add things to the cart, like a checked bag, seat assignment, or pay to book a meal or other services,” he said. “That’s dramatically different from the way travel was once sold in U.S.”

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