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Checked baggage cost to airline

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Checked baggage cost to airline

Old 24th Nov 2022, 13:57
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Checked baggage cost to airline

How much does it cost a large airline to handle a checked-in bag for a point-to-point A320/B737 flight compared to it being cabin baggage ?

Consider an airline which carries at least 10 million passengers a year and self handles (or has obtained a very competitive deal with a handling company) at its home base/hub. If an economy class passenger flying on an A320/B737 with no connections checks in and obtains a boarding pass online but needs to check in a within-size-limits bag to the hold for the flight.... how much will it cost the airline to process that baggage handling, as opposed to the passenger taking it as a cabin bag ?

I realise that if a passenger uses a self-tagging baggage check machine it'll be significantly cheaper than involving a human being at a check-in desk... but I would be interested in having some sort of idea of the cost per bag to the airline. Assume that all the costs around bag check (e.g. desk rental, employing person in the terminal, IT system cost, employing people to load the bag onto the aircraft before departure and unload at arrival, paying out for lost bags, etc) all need to be accounted for - so you can't argue "well the infrastructure is all in place so there is no cost"

Yes, you could give a "how long is a piece of string" type of response, but there must be some sort of rough number

Last edited by davidjohnson6; 24th Nov 2022 at 16:52.
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Old 24th Nov 2022, 21:05
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Good question! Of course, what it actually costs them - and what they charge are not directly related. As long as they charge 1% more than cost. Usually, the charge is as much as the market will bear.
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Old 25th Nov 2022, 04:11
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Originally Posted by PAXboy View Post
Good question! Of course, what it actually costs them - and what they charge are not directly related. As long as they charge 1% more than cost. Usually, the charge is as much as the market will bear.
I suspect they really don't want us to know what the actual cost is. And that this is related to LCCs selling very low fare tickets
As I said (more or less) there - fifteen quid for the ticket but another hundred to take a 20kg suitcase there and back. My own feeling is that the suitcases are subsidising those who are able to do a handbag-only flight.
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Old 25th Nov 2022, 06:36
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The indirect benefits should not be overlooked. If you can limit most people to handbaggage you can schedule 25 minute turnaround times and limit delays and other costs like lost luggage. The direct handling cost is only one part of the equation.
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Old 25th Nov 2022, 11:38
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I recall talking to a friend of a friend in the USA some 25 years ago. His job was to price spare parts for cars (I cannot recall which but a main Detroit company), he said:
"I am given the item, say an oil filter, and told how much it cost to produce and how many a year we produce. I look at the same product that our competitors are selling. I look at historical data and how many cars we are producing this year. My final price also considers what the market will consider reasonable - so that they will buy our original and not a third party."

Pretty much the same decision train.
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Old 25th Nov 2022, 11:50
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It's very clear that the price some airlines in Europe charge to take a suitcase is well above the actual cost to the airline to handle that suitcase. Ancillaries are considered a major profit source for good reason. However, does anyone have any info as to what the real cost is to the airline ?
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Old 25th Nov 2022, 14:12
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In many, if not most parts of the world, once the agent tags your checked baggage and it disappears on the belt into the bowels of the terminal, it's using infrastructure belonging to, and operated by, the airport rather than the airline.

You can bet that service isn't provided to the airlines for free and the cost will be recovered by the airport, whether on a per-item or other agreed basis. I suspect that's a not insignificant proportion of the true cost to an airline of carrying passengers' hold baggage.
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Old 25th Nov 2022, 14:48
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Since the invention of 'Salami Sliced Pricing' we will never know. The western world is currently geared to having as low a headline price as possible to catch the Click - and then adding it all on from there. We all see this in numerous commercial purchasing. I expect this method to stay in place for some time to come - like till long after my time.
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Old 25th Nov 2022, 17:25
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I've been told that passengers with baggage tend to be less price sensitive and airlines want to charge these more. It used to be that business travellers would pay a higher cost (less price elastic) and liked to be home on Saturday nights hence that rule to discorage them from using cheaper fares. Now it is thought that it is those with baggage who are less price sensitive so will apy more for their trip.

I am not aware of handling agreements (do LoCos still use the standard Iata ground handling agreement?) but I would imagine that there there is a cost per bag handled. There could be additional security charges. Maybe someone has inside knowledge.

Other factors:
Increased fuel costs from the additional weight, discussed elsewhere, probably not that high for short haul.
Not having to unload baggage (and possibly lose a slot) if the passenger doesn't turn up.
More space for cargo - although that may not be relevent in many cases, particularly for LoCos.

LoCos of course like quoting low basic costs and making money on anciliaries (you may have come across tradesmen like that). It seems to work for them although I like to know what expect in advance. On one occasion I lost my boarding pass but I was flying with a legacy carroer and printed off a replacement. If it had been Ryanair & been charged 40 (is that really the cost) I would have been livid and not flown with them again yet the fare may have been 40 lower than a legacy carrier fare. Do not think that people always act in what appears to be a rational way.
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Old 25th Nov 2022, 23:43
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Originally Posted by davidjohnson6 View Post
How much does it cost a large airline to handle a checked-in bag for a point-to-point A320/B737 flight compared to it being cabin baggage ?

Consider an airline which carries at least 10 million passengers a year and self handles (or has obtained a very competitive deal with a handling company) at its home base/hub. If an economy class passenger flying on an A320/B737 with no connections checks in and obtains a boarding pass online but needs to check in a within-size-limits bag to the hold for the flight.... how much will it cost the airline to process that baggage handling, as opposed to the passenger taking it as a cabin bag ?

I realise that if a passenger uses a self-tagging baggage check machine it'll be significantly cheaper than involving a human being at a check-in desk... but I would be interested in having some sort of idea of the cost per bag to the airline. Assume that all the costs around bag check (e.g. desk rental, employing person in the terminal, IT system cost, employing people to load the bag onto the aircraft before departure and unload at arrival, paying out for lost bags, etc) all need to be accounted for - so you can't argue "well the infrastructure is all in place so there is no cost"

Yes, you could give a "how long is a piece of string" type of response, but there must be some sort of rough number
Does self tagging actually save much money ?
Flew out of BHX with Jet2 on Tuesday. Used the luggage self check in service. Four staff hovering around to help out. Once tagged, we carried our luggage over to the check in desks (four were open) and the check in staff then pressed the button to start the conveyor belt. I'm not convinced that needing eight staff for self check-in is actually a cost saving !
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Old 26th Nov 2022, 06:40
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I would expect between $2-$5 per employee touch-minute with automated baggage handling counting as a person to include the initial cost, the cost of maintaining it, and the cost of monitoring it. Figure about 10-15 touch-minutes per bag overall and that's as much as $20-$65 per average checked bag with some of that paid to run the airport.

I suppose one could look at air-shipping rates for similar weight and size to see what it costs without including the passenger. It may be a lower direct-cost for the passenger than the luggage, but the passenger is the one with the motive to get there and everyone one of them who doesn't board is paying the airline for a service it's not providing.
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Old 26th Nov 2022, 15:25
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Self Tagging varies quite a bit - some are every easy - others not so.
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