Charging extra for carry-on luggage on planes is not just a nuisance for passengers or a recurring source of controversy. It is, mainly, an important line of business for airlines, the cornerstone of these companies’ income from what is known as complementary services (everything that is not strictly the flight).
The European Parliament’s resolution this week urging the Commission to end this practice, although non-binding, has got on the nerves of companies and provoked their immediate reaction. It is no wonder, since part of its financial model is at stake. Complementary or auxiliary services include, depending on the airline, charging 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 42.6 billion dollars to their turnover, last year they reached 102 billion dollars, 15% of total income, indicates a recent report by the consulting firm OAG. “Such a significant proportion highlights the strategic importance of ancillary services,” the analysis notes.
Seat selection and baggage fees account for half of total additional revenue, OAG continues, and baggage charges alone (including checked bags or excess baggage) account for more than a third of all baggage billing. services.
Low cost airlines would be among the most affected by a possible ban on charging per carry-on bag. Not in vain, they have been pioneers in unbundling rates and services, and for this reason they also stand out as the most dependent on auxiliary income. OAG highlights that the weight of billing for complementary services exceeds 30% of the total in ten of the main airlines. In the case of the Hungarian Wizzair, with strong growth at the Barcelona airport, these revenues reach 56% in the last year analyzed –see graph–. In Ryanair they contributed almost 45% that year, and 31.4% in easyJet.
However, eliminating the charge for hand luggage as an extra could have an undesirable impact on passengers, warns Pere Suau-Sanchez, 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 prices can be as adjusted as possible; “A measure like this will contribute to an 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 sense that the rise of low cost airlines and their flexible fares has contributed to reducing the average price of tickets despite the increase 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 at $140.
Whatever the airlines cannot charge as an extra, the consultancy concludes, they will charge it on the ticket. The client always pays.
