Why do airlines charge so much for checked bags? This obscure rule helps explain why

Five out of the six biggest U.S. airlines have raised their checked bag fees since January 2024. Take American Airlines. In 2023, it cost US$30 to check a standard bag in with the airline; today, as of March 2024, it costs $40 at a U.S. airport – a whopping 33% increase. As a business school professor who studies travel, I’m often asked why airlines alienate their customers with baggage fees instead of bundling all charges together. There are many reasons, but an important, often overlooked cause is buried in the U.S. tax code. A tax-law loophole Airlines pay the federal government 7.5% of the ticket price when flying people domesti......

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