But it's not just about unbundling and charging customers more. A key driver in domestic checked baggage fees is tax arbitrage. Airlines want to get a portion of the transportation cost out from under the base airfare so that it is not subject to the government's 7.5% excise tax on tickets.

Airlines have shifted to charging for baggage primarily to unbundle fares and create new revenue streams, a practice known as "ancillary fees." By removing the cost of a checked bag from the base ticket price, airlines can appear more competitive on search engines and price-comparison websites. This strategy also serves an operational purpose: by incentivizing passengers to travel with only carry-on luggage, airlines can reduce the weight of the aircraft, thereby lowering fuel consumption and carbon emissions. Historically, this trend accelerated after the 2008 oil crisis when American Airlines became the first major US carrier to charge for a first checked bag. In 2026, these fees also help airlines offset the 7.5% federal excise tax in the U.S., which applies to ticket fares but typically does not apply to optional services like baggage or seat selection.