US Airlines Lose $160 Million A Year On Lost Luggage

The month before the pandemic American Airlines lost 75,000 checked bags. Incoming CEO Robert Isom told an internal group of American employees just after that that “every lost bag is nearly $60.”

  • Annualizing that month’s baggage mishandling, American Airlines was losing $54 million per year by failing to deliver customer luggage on time.

  • And using that same cost across the U.S. airline industry, it means carriers were losing $160 million per year mishandling bags.

Those losses could get even bigger because the Biden Administration plans to require airlines to refund check bag fees for bags that are delayed 12 hours (domestic, 25 hours international). Currently an airline can keep the bag fee as long as it eventually returns the bag.

When you pay for a big the implied service is that it will be delivered to baggage claim when your flight lands. Delta and Alaska both compensate customers when bags aren’t delivered within 20 minutes of arrival. Alaska pioneered this and Delta competes aggressively with them in Seattle. American only manages bad delivery within 20 minutes 63% of the time at its Miami hub.

Here’s an important tip when checking your bags with American: if you’re forced to standby for a flight at the gate, your bags will not make it. That’s not just playing the odds, it is literally how American’s systems are designed.

American’s “Deviate” (DV8) system reroutes bags. If your itinerary changes, and you have bags checked, a new tag for your bag gets printed when the bag is scanned. However this only gets triggered if you have to be checked in for your new flight with a seat assignment for the bag to get rerouted. If you stand by at the gate, or you’re rebooked without a seat assignment, your bag isn’t going with you because there’s not going to be enough time for American to locate the bag and get it onto your plane after you’ve been given your boarding pass.

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