Business Solutions

How much are those checked bags really costing you?

Many international mobility policies allow relocating employees and their dependents to take several extra bags per person along with them on their overseas flight while their household goods are in transit. The airline industry of late has undergone a series of changes, and checked baggage allowances and excess baggage fees have not been spared. While this is a minor provision in a mobility policy, it can have a significant financial impact, increasingly so when large families are involved. For these reasons, it is important to monitor spending in this area to determine whether a policy revision is in order.

Checked baggage allowances and excess baggage fees can vary dramatically by airline and destination. Traditionally, the major international carriers allowed two free checked bags per person. Recently, however, many have shifted to one free piece of luggage on international flights. Delta Airlines was the first major global carrier to introduce baggage fees on all transatlantic basic economy tickets beginning in April 2018. We can expect this trend to continue, thus making a well-defined baggage benefit more important than ever.

Piece vs. weight

Additionally, there are regional nuances that can have a large impact on the bottom line. The most notable example for international travelers is how some airlines charge a fee per bag for excess baggage, whereas others charge a fee per kilogram. This is known as the piece concept versus the weight concept. By law, all flights originating or terminating in the U.S. or Canada must follow the piece concept, while conversely, the weight concept is prevalent in the Middle East and Asia.

Let us consider the example of two different families going on two separate assignments. Each family member is taking their policy entitlement of two excess bags per person, each weighing 23 kilos. One family is flying from Houston to Dubai, and the price per excess bag is $158; therefore, the excess baggage fee for the additional eight bags totals $1,264. Another family is traveling from Dubai to Kuala Lumpur. Each extra bag, weighing 23 kilos, at $30 per kilo, is $690. Eight extra bags for this family of four will total $5,520.

This represents a difference of $4,256, a clear example of how excess baggage fees can escalate very quickly. Companies with a global policy that have a presence in the regions where the weight concept applies should be aware of this and adjust their policies accordingly.

Original intent

With these major industry changes and variances, it is wise to remember the original intent of the company’s excess baggage provision. Was the purpose to support the transitioning employee and their family with immediate-need items, or was it a cost-savings measure when eliminating or reducing an air shipment benefit? Moving to another country is not like taking a trip. People have immediate-need items that they require in order to start living and working in a new country. They will need to be able to dress appropriately for the climate as well as for work and leisure. They will have computers, medicine, toiletries, and other personal items in addition to valuables that should be hand-carried and are not insurable in a household goods shipment. Moreover, families with small children will have even greater requirements. The need is undeniable, but it must be balanced with the cost.

In fact, the term “excess baggage” is quickly becoming outdated, as airlines are now charging fees for items that were once included in the basic fare.

The term “excess” implies “in addition to.” With the airlines’ free checked bag provision being reduced or eliminated, companies might want to consider how many total bags they want to allow each person to take and then incorporate a per-person or per-family cap on the cost. This approach will accommodate any cost-shifting done by the airlines as well as limit the company’s financial exposure.

Giving the option of sending an air shipment or increasing the size of the air allowance in lieu of excess baggage are other alternatives to consider. It may represent a cost savings, especially in the case of a large family.

Understand the impact

When reviewing your global mobility policies, it is important to understand the impact that these regional nuances and changes in the airline industry can have, not only on the total relocation cost, but on the relocating families as well. Now more than ever, the cost of air travel is not just the ticket price. It is important to work with your travel provider to understand the best options for your relocating employees, as well as to partner with your relocation management company to audit and track the spend on excess baggage. Furthermore, it may be necessary to incorporate language into the mobility policy stressing the importance of the relocating employees fully understanding the excess baggage policy for their flights.

This is a great example of how mobility policies are living documents that need to be reviewed periodically to ensure they remain current and responsible in an ever-changing world.

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