Charging extra for hand luggage on planes isn’t just an inconvenience for passengers or a recurring source of controversy. It is mainly an important line of business for airlines, the cornerstone of these companies’ income for what is known as complementary services (everything that is not strictly the flight).
The resolution of the European Parliament that this week urged the Commission to eliminate this practice, although not binding, has made the companies very nervous and caused an immediate reaction. This is normal, as part of their financial model is at stake. Complementary or auxiliary services include, depending on the airline, the charge for baggage – whether in the cabin or in the hold -, seat selection, priority boarding or purchases on board the plane, among others .
Companies have encouraged them in the last decade: if in 2013 they contributed 42,600 million dollars to the turnover, last year they reached 102,000 million dollars, 15% of the total income, indicates a recent report of the OAG consultancy. “Such a significant proportion highlights the strategic importance of auxiliary services”, the analysis points out.
Seat selection and baggage fees account for half of total additional revenue, OAG continues, with baggage fees alone (including checked bags or excess baggage) accounting for more than a third of all billing for these services.
Low cost airlines would be among the most affected by a possible ban on hand luggage charges. It is not for nothing that they have been pioneers in disaggregating rates and services, and for this reason they also stand out as the most dependent on ancillary income. OAG emphasizes that the weight of billing for complementary services exceeds 30% of the total in ten of the main airlines. In the case of Hungarian Wizzair, with strong growth at Barcelona airport, these revenues reached 56% in the last financial year analyzed – see the graph -. In Ryanair, they contributed almost 45% that year, and 31.4% in EasyJet.
However, removing the charge for hand luggage as an extra could have an undesirable impact on passengers, warns Pere Suau-Sanchez, a professor at the UOC and Cranfield University. “A la carte prices have allowed each passenger to pay only for the services they need and that the prices can be very adjusted; a measure like this will contribute to the increase in the base price of trips, which is not good in a context of increasing prices, particularly for passengers who do not need this service”, he considers.
The OAG analysis points out in this regard that the rise of low cost and their flexible rates has contributed to reducing the average price of tickets, despite the increase in the last year due to inflation. In 2013 the global average rate was $306 (adjusted for inflation in 2022), they add from OAG. Now, according to IATA calculations, it is $140.
What the airlines cannot charge as extra, the consultant concludes, they will add to the ticket. The customer always pays.
