Why these 3 airlines are still raising bag fees even though passengers are already fed up with high prices

By Genna Contino

Raising these fees helps airlines avoid a federal tax and boost their branded credit-card businesses, experts say

Just when you thought flying couldn't get worse this year, Delta Air Lines is the latest major carrier to announce it is raising checked-bag fees.

Three major airlines have hiked their checked-bag fees this month, in another blow for travelers still reeling from long TSA lines and increased airfare.

Delta Air Lines (DAL) is raising its first- and second-bag fees by $10, following in the footsteps of United Airlines (UAL) and JetBlue Airways (JBLU), which announced increased baggage fees earlier this month.

Higher bag fees are another unwelcome financial side effect of the Iran war for consumers whose wallets are already being squeezed by gas prices surpassing $4 per gallon, higher mortgage rates and other price increases. Airlines are feeling the pain of surging oil prices (CL00) (BRN00), which have a direct impact on jet fuel - the cost of which has nearly doubled since the end of February, according to the Argus U.S. Jet Fuel Index.

See also: Delta's stock soars after a well-timed earnings report showed higher fuel costs weren't an issue

Raising bag fees is a way to pass on rising fuel costs to customers without paying a specific federal tax, said Michael Taylor, a senior managing director with JD Power who tracks the travel industry.

"If you're going to hike your airfare because your fuel costs have gone up, your revenue from that is subject to an excise tax," or a federal tax that applies to the base airfare, Taylor said. "If you hike your bag fee, you don't pay that excise tax."

Airlines could also be looking at higher bag fees as "a great bump to their credit-card stream," said Katy Nastro, a travel expert for the travel website Going, as free baggage is one of the top perks that comes with many co-branded airline cards.

Read more: United Airlines' best loyalty perks will soon be reserved for its cardholders. Is the card worth it?

Beginning Wednesday, passengers flying Delta will pay $45 for their first bag, $55 for their second and $200 for their third bag, according to travel websites and news reports. Delta did not immediately respond to a request for comment.

United also hiked fees by $10 for first and second checked bags, and is now charging $50 and $60, respectively. Customers can reduce the cost of their first and second bags by $5 if they pay the fee more than 24 hours in advance, but a third bag costs $200 at any time of purchase. "This is the first time in two years the airline has raised bag fees," a United spokesperson told MarketWatch. They did not provide the reason for the price increase.

JetBlue, which has a dynamic pricing model for its baggage fees, increased the cost of a first bag from $35 to $39 for off-peak periods and from $40 to $49 for peak periods for domestic, Caribbean and Latin American flights. Customers who purchase bags more than 24 hours in advance save $10 off their first and second bag.

"As we experience rising operating costs, we regularly evaluate how to manage those costs while keeping base fares competitive and continuing to invest in the experience our customers value," a JetBlue spokesperson said.

Airline stocks were trading lower early Tuesday afternoon - with Delta shares down 1.4% at around $66, and United and JetBlue shares each down about 3% at roughly $88 and $4.50, respectively.

'Oh my gosh, enough already.': How to protect your trip - and your wallet - during the most chaotic spring-break travel season in years.

The airline industry is notoriously a copycat industry, so Nastro said she would be more surprised if American Airlines (AAL) doesn't follow suit to "keep up with the Joneses." American Airlines did not immediately respond to a MarketWatch question about whether the carrier has plans to raise fees.

Raising bag fees is "one of the worst things you can do as far as satisfaction and loyalty" goes, Taylor said, despite the move appearing consumer-friendly on its surface since customers don't necessarily have to check a bag when traveling.

"This is going to hurt families since it's likely we see this become the norm across all airlines," Nastro said. "Again, I'd be more surprised at this point if we didn't see more carriers hop on the bag-fee train."

Read next: Flights will keep getting more expensive and harder to find. Here's how much worse it could get.

What personal-finance issues would you like to see covered in MarketWatch? We would like to hear from readers about their financial decisions and money-related questions. You can write to us at readerstories@marketwatch.com. A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission.

-Genna Contino

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-08-26 1116ET