IdeaWorksCompany, a consultant on airline ancillary revenues, and CarTrawler, the technology platform providing transport solutions for online businesses, recently estimated airline ancillary revenue at €83.5 billion worldwide for 2018. This CarTrawler Global Estimate of Baggage Fee Revenue identifies baggage as a €25.2 billion component and provides a worldwide summary of baggage fee policies for 20 top airlines.
Each year IdeaWorksCompany, through the sponsorship of CarTrawler, analyses the ancillary revenue disclosures for airlines all over the world. These results are applied to a larger list of carriers (which numbered 175 for 2018) to estimate ancillary revenue activity for the world’s airlines. Baggage activity for each category of airline is added to this analysis to calculate a global estimate. It is a significant component of ancillary revenue and consists of three primary sources: checked baggage in the aircraft belly, added fees for heavy and extra-large bags, and, for some airlines, the price charged for larger carry-on bags.
| CarTrawler Global Estimate of Baggage Fee Revenue | |||
| 2018 | 2017 | 2014 | |
| Baggage Fee Revenue | $28.1 billion | $23.6 billion | $13.4 billion |
| As a % of
Global Airline Revenue |
3.2% | 3.0% | 1.8% |
| Source: A la carte revenue statistics derived by IdeaWorksCompany from 2017, 2016, and 2013 airline results, combined with IATA annual airline revenue projections for 2018, 2017, and 2014. | |||
Stringent baggage fee policies are hallmarks of top revenue-performing low-cost carriers. The surprising development within the past two years is the implementation of bag fees by some of the world’s leading global network airlines.
“The value of airlines’ a la carte revenue, or optional extras that customers can add to their basic airline fares, has risen dramatically in recent years, growing by 128% between 2014 and 2018,” said Aileen McCormack, CarTrawler’s Chief Commercial Officer. “So it is no surprise that baggage fee revenue has grown by a similarly huge margin, in terms of monetary value and as a percentage of overall global airline revenue. This overall trend reflects traditional airlines’ strategy of embracing a la carte revenue alongside low-cost providers, offering customers the best-value solutions in a transformed marketplace.”
The other half have implemented bag fees on a portion or the entirety of their route network. When these airlines are organised by global region, it is easier to see the policy groupings that currently exist. The abundant reliance on bag fees in Europe and North America occurs largely due to the presence of a very significant low-cost carrier industry. Elsewhere in the world, traditional airlines include baggage benefits for all fares and have not yet adopted basic economy fare strategies.
