Refunds May Cost Airlines $600K a Month

NEW YORK ( MainStreet) -- Consumers have had to put up with an endless series of new or increased airline fees in recent years on everything from checked bags to printing out a boarding pass. One U.S. senator wants to provide travelers with some small but symbolic consolation.

Sen. Chuck Schumer, D-N.Y., told The Associated Press this week that he plans to introduce a bill requiring airlines to reimburse customers for baggage fees if their luggage doesn't arrive on time, unless the airlines take the initiative to adopt the guideline on their own.

Some airlines face minor losses if a bill requiring reimbursement of baggage fees for delayed luggage is passed.

Schumer's proposal expands on a rule set to take effect next month that forces airlines to refund passengers for baggage fees if their luggage is lost permanently, but the regulation, part of the Department of Transportation's passenger bill of rights, does not address luggage that is delayed temporarily.

At the moment, airlines are required to cover related expenses on lost or delayed baggage for up to $3,300 per passenger, but even if your luggage ends up lost in another country for all eternity, the airlines are allowed to hold onto the fee you paid for them to transport that baggage in the first place.

Schumer's proposed bill would potentially add some quality controls for how the airlines treat a passenger's luggage, by imposing a not insignificant monetary penalty for carriers. We analyzed the most recent Department of Transportation data on mishandled baggage complaints -- from May -- to determine which airlines are the worst offenders. (The data include complaints about bags that were damaged as well as lost, which would not be subject to the new rule, but the numbers provide a ballpark estimate.) We paired this with each carrier's current cost of checking in a single piece of luggage to find out how much money the airlines stand to lose in a single month from Schumer's proposal.

To put these numbers into perspective, however, keep in mind that airlines reaped more than $3 billion per year from baggage fees last year. Delta alone earned some $952 million from baggage fees, yet by our calculations would have lost just $600,000 in May. If we assumed Delta lost this much each month, that would still only be $7.2 million in lost revenue for the year, or less than one-hundredth of what it takes in from baggage fees.

Southwest ( LUV)
Mishandled baggage complaints in May: 37,360
Cost of first checked bag: Free
Estimated lost revenue: $0

American Airlines ( AMR)
Mishandled baggage complaints in May: 24,999
Cost of first checked bag:: $25
Estimated lost revenue: $624,975

Delta Airlines ( DAL)
Mishandled baggage complaints in May: 24,014
Cost of first checked bag: $25
Estimated lost revenue: $600,350

American Eagle Airlines
Mishandled baggage complaints in May: 12,896
Cost of first checked bag: $25
Estimated lost revenue: $322,400

US Airways ( LCC)
Mishandled baggage complaints in May: 11,932
Cost of first checked bag: $25
Estimated lost revenue: $298,300

United Airlines ( UAL)
Mishandled baggage complaints in May: 10,357
Cost of first checked bag: $25
Estimated lost revenue: $258,925

Continental Airlines ( CAL)
Mishandled baggage complaints in May: 9,566
Cost of first checked bag: $25
Estimated lost revenue: $239,150

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