United Airlines has joined JetBlue in increasing fees for checked bags, a move that signals a growing trend among U.S. Carriers to pass soaring operational costs directly to passengers. The decision comes as conflict in the Middle East continues to destabilize global oil supplies, driving jet fuel prices to levels that have significantly eroded airline profit margins.
Starting this Friday, most United passengers traveling within the United States, Mexico, Canada, and Latin America will see a $10 increase in luggage costs. The first checked bag will now cost $45, while a second bag will cost $55. In a statement, the airline noted that this marks the first time in two years that it has raised these specific fees.
The price hike follows a similar move by JetBlue, which implemented its own increases on Monday. For most domestic economy travelers on JetBlue, the first checked bag has risen to $39 from $35. During peak travel windows—including spring break, major holidays, and the summer months—that fee jumps to $49, up from $40.
The fuel crisis and the Strait of Hormuz
The primary driver behind these increases is a volatile energy market. The ongoing war in the Middle East has created severe disruptions near the Strait of Hormuz, a narrow waterway through which approximately one-fifth of the world’s oil typically passes. Because jet fuel is refined from crude oil, fluctuations in the Strait’s stability translate directly into higher costs at the airport pump.
According to data from Argus Media, the average price for a gallon of jet fuel across major hubs—including New York, Los Angeles, Houston, and Chicago—has surged by more than 85% since the conflict escalated on Feb. 28. Prices that averaged $2.50 per gallon at the start of the conflict climbed to $4.88 by last Thursday.
Beyond the cost of the fuel itself, geopolitical tensions have forced airlines to alter their flight paths. Airspace closures in parts of the Middle East have necessitated longer routes, increasing the total volume of fuel burned per trip and further inflating operating expenses.
The financial impact is substantial. In a recent conference with investors, United CEO Scott Kirby stated that higher fuel costs have already added roughly $400 million to the airline’s operating expenses. Executives from Delta Air Lines and American Airlines reported similar figures, underscoring a systemic crisis across the domestic industry.
Why airlines prefer fees over ticket prices
While passengers often wonder why airlines do not simply add a “fuel surcharge” to the ticket—as many international carriers do—the answer lies in a specific federal tax structure. Under U.S. Law, airlines are required to pay a 7.5% federal excise transportation tax on the base airfare of domestic flights.
However, the law excludes ancillary fees, such as baggage and seat selection, from this tax, provided the charges are separable from the transportation cost and listed as a specific amount. By raising the cost of a bag rather than the price of the seat, airlines avoid paying that 7.5% tax on the additional revenue. For example, a $40 baggage fee remains fully in the airline’s pocket, whereas a $40 increase in base airfare would require the airline to remit $3 to the government.
JetBlue has defended this strategy, stating that charging more for optional services used by a select group of customers allows the airline to keep base fares more competitive for the general traveling public.
New Baggage Fee Comparison
| Airline | First Bag (Standard) | First Bag (Peak) | Second Bag |
|---|---|---|---|
| United Airlines | $45 | $45 | $55 |
| JetBlue (Off-Peak) | $39 | N/A | $59 |
| JetBlue (Peak) | N/A | $49 | $69 |
Who is exempt from the increases?
Despite the general price hikes, both carriers are maintaining a set of exemptions to reward loyalty and support specific groups. Passengers who hold co-branded airline credit cards, those who have reached specific loyalty-tier milestones, and active military personnel will continue to receive their first checked bag for free.
Travelers in premium cabins—such as first or business class—are also exempt from these fees. JetBlue has confirmed that most customers flying transatlantic routes will still be eligible for one free checked bag.
Passengers should be mindful of timing; United has implemented an additional $5 surcharge for customers who check their bags less than 24 hours before departure, encouraging early check-ins to streamline airport operations.
Fuel remains the second-largest expense for U.S. Airlines, trailing only labor. With crude prices remaining volatile, analysts suggest that more carriers may follow suit, shifting their revenue models toward ancillary fees to hedge against the unpredictability of the global energy market.
Industry observers are now looking toward the next quarterly earnings reports from the “Big Three” carriers to see if these fee increases are sufficient to offset the fuel spike or if further ticket price hikes are inevitable.
Do you think ancillary fees are a fair way for airlines to handle fuel spikes, or should the cost be baked into the ticket? Share your thoughts in the comments.
