Airlines' passenger fee bonanza is going global in 2018

Key Points
  • Delta Air Lines is bringing its basic-economy class global next year.
  • Delta will start charging $60 for a bag next year for basic economy to Europe.
  • Travelers paid U.S. airlines a record $1.2 billion to transport their bags in Q3.
A Delta Airlines customer checks his baggage before a flight at San Francisco International Airport (SFO).
Getty Images

Fliers paid airlines a record $1.2 billion to carry their checked luggage and $720 million to change or cancel their tickets in the third quarter, according to the Department of Transportation.

Those numbers are set to rise as airlines expand no-frills basic-economy fares next year.

Delta Air Lines on Thursday said its basic-economy class product would go worldwide by the end of 2018. Earlier this month, Delta said it will charge basic-economy passengers booked to and from Europe $60 to check their first bag starting in April.

International routes were one of the last places where passengers weren't forced to pay for checked luggage.

If passengers don't want to pay a fee, they will have to pay a higher fare — conveniently, it's often the same sum as the baggage fee — to upgrade to regular economy class.

Delta said that segmenting its cabin with basic-economy, premium economy and other products will generate $2.7 billion in revenue by 2019.

Worldwide, airlines will bring in a record $57 billion in passenger fees this year, according to a recent study by consulting firm IdeaWorks and rental car site CarTrawler. It's partially the result of budget airlines charging for everything, including seat assignments and food, and full-service airlines trying a la carte pricing.

Delta is not the only airline expanding restrictive, no-frills fares next year. Its French-Dutch partner Air France-KLM is introducing a similar option.

American Airlines offers basic-economy fares that are even more restrictive because they prohibit those passengers from using overhead bins. American and Delta say about half of their passengers opt to pay the higher regular economy fare.

American is also offering basic economy tickets to some international destinations, including Cancun.

On Thursday, Norwegian Air Shuttle announced four new trans-Atlantic routes: New York and Los Angeles to Madrid, New York to Amsterdam and Los Angeles to Milan. That will bring the budget airline's trans-Atlantic routes to 61 next year.

Other low-cost airlines are planning additional trans-Atlantic routes for 2018.

Delta shares were up 2.9 percent on Thursday.