More than you’d think but not as much as the airlines are charging (for bags 2 and 3, that is).
WSJ: Based on our own estimate derived from consultations with industry executives and other sources, the cost to carry checked luggage comes to roughly $15 a bag. That, it turns out, is what most big airlines — including AMR Corp.’s American Airlines and Continental Airlines Inc. — are charging fliers to check their first bag. But those who check multiple bags, ski equipment or oversized or overweight luggage are paying much, much more — allowing airlines to make a tidy profit. In those instances, baggage fees may yield more profit for the airline than what the carrier is making on the basic passenger ticket.
Airlines don’t break out the expense of transporting passenger baggage, and they are tight-lipped about baggage because they know many customers are angry about the new fees. Airlines aren’t always so opaque when it comes to their cost data — American once famously counted the savings from removing olives from salads.
But here’s how the writer came up with that $15:
In addition to labour expenses, airlines say they spend millions of dollars annually on baggage equipment, facilities and sorting systems, paying rent to airports for bag rooms, carousels and offices and buying carts, tractors and conveyors. They also pay to deliver lost bags to customers and pay claims for items never found. Airline executives suggest that boils down to about one-third to half as much as the labour cost; figure another $4 roughly per bag.
Then there’s the fuel cost to fly the bag. One rough formula sometimes used in the airline business to approximate fuel costs is that it requires 3% to 5% of the weight of an object in fuel to fly it one hour. That means at current fuel prices, it would cost about $1 to $2 to fly a 40-pound bag on an average three-hour trip.
Add it all up, and the best guess is around $15 per bag in airline costs.
The profit for the airline comes from bags 2 and 3 as well as heavy and overstuffed ones.
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