The unbundling of airfares with an emphasis on fee income rather than airfare income is driven in large part by the regulatory treatment of airfares, taxes fees and charges.
The tax benefit to Canadian airlines isn't there, whereas it is significant in the USA. In plain language, in the USA the air travel tax is calculated on the basefare, not on fees. In Canada tax is collected on the fees. The last USA estimate I saw for 2023 (as quoted from CNN) was that US passenger airline revenue from baggage fees was $7billion (about $9 for the average domestic passenger). By splitting out the cost of bags the airlines avoided paying about $500 million in taxes on their fees. Based on this, I doubt we will see a greater emphass on unbundling.
Last edited by Transpacificflyer; Dec 8, 2024 at 3:12 pm