Baggage Fees Spike Across Major Airlines as Fuel Costs Surge
Baggage Fees Spike Across Major Airlines as Fuel Costs Surge
Aris Suwanmalee G/Shutterstock
https://www.fodors.com/news/news/airlines-raise-baggage-fees-as-jet-fuel-prices-surge-amid-global-tensions
U.S. airlines including JetBlue, United, Delta and Southwest are raising baggage fees as jet fuel costs climb, signaling more expensive summer travel ahead.
It is not just ticket prices being affected by the geopolitical situation. Travelers will also pay more to check baggage this spring and summer due to rising jet fuel costs. Four U.S. airlines have revised their baggage fees, and fliers can expect to pay $10 more to check a bag. This, along with fuel surcharges and skyrocketing ticket prices, will make travel relatively more expensive this year.
JetBlue was the first major U.S. airline to pass rising jet fuel costs on to customers. On March 30, the low-cost airline announced that the first checked bag will cost $39 (up from $35), and during peak travel season, it will cost $49 (up from $40). Bringing a second bag will also be more expensive, at $59 during off-peak times and $69 during peak times (both up by $9).
JetBlue told CNBC that it’s never ideal to increase fees, but these changes are made only when necessary. “As we experience rising operating costs, we regularly evaluate how to manage those costs while keeping base fares competitive and continuing to invest in the experience our customers value.”
As expected by experts, United soon followed suit, raising its baggage fee by $10. “For tickets purchased on or after April 3, 2026, fees will go up by $10 for your first and second checked bag and by $50 for your third checked bag in most markets,” it now says on its website. This is the first time in two years that the airline has increased baggage fees, it says, without giving a reason.
This week, Delta and Southwest also added $10 to baggage costs.
Passengers will pay $45 for a first bag, $55 for a second, and $200 for a third bag on domestic or short-haul international flights with Delta. However, first-class passengers and loyalty customers will have exceptions. Delta said in a statement, “These updates are part of Delta’s ongoing review of pricing across its business and reflect the impact of evolving global conditions and industry dynamics.”
Southwest, for decades, had a “bags fly free” policy. It changed last year when it started charging $35 for the first checked bag and $45 for the second. Now it has increased fees “against the evolving global backdrop.” For bookings from April 9, the first bag will cost $45 to check and the second $55. Loyalty members (A-List Preferred and Choice Extra customers) still receive two free checked bags.
Airlines cannot continually raise ticket prices, so they increase ancillary fees, which do not change base fares and affect fewer customers. Airlines in the U.S. make more than $7 billion on baggage fees every year. It is a major source of revenue, and usually if one airline raises prices, others soon follow. Katy Nastro, an expert on airlines from Going.com, told The New York Times, “Airlines tend to move in herds when it comes to extras.”
Fuel makes up 20% to 40% of airline operating costs. When prices rise, airlines typically do not absorb them but pass them on to customers. Since the U.S.-Iran war began, the aviation industry has struggled to adapt across the globe. Along with disruptions, cancellations and rerouting, operating costs have surged.
Jet fuel prices have risen sharply from $2.50 per gallon on Feb. 27 to $4.16 per gallon on April 8. Airlines have started charging more while also cutting some routes to save costs. Air India, Cathay Pacific, Air China, Qantas, WestJet, and Air Canada have all raised ticket prices after adding increased surcharges. Meanwhile, United and SAS have trimmed their schedules.
The U.S. and Iran agreed to a two-week ceasefire at a critical moment on Tuesday after U.S. President Donald Trump threatened to completely destroy Iran if the Strait of Hormuz was not reopened. However, Israel continued its attack on Lebanon. The U.S. and Israel claimed it was not part of the deal brokered, while Iran closed the Strait of Hormuz again, citing a ceasefire violation. Amid this fragile ceasefire, oil prices remained high as the world watched what would happen next in the conflict.
Airline prices are unlikely to come down, and if you are planning summer travel now, you may be surprised by the extra costs and fewer flight options.
A microscope on small businesses: Spotting opportunities to boost productivity
https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-spotting-opportunities-to-boost-productivity?
By
MSMEs are vital for growth and jobs, but struggle with productivity. The route to higher productivity lies in creating a win-win economic fabric for all companies.
2. Boosting MSME productivity could yield significant value
Despite their central role in economies across the world, MSMEs are only about half as productive as large companies, and narrowing that gap could create significant value. Yet somewhat unexpectedly, this gap is by no means monolithic: relative productivity performance varies enormously across countries and sectors, and even within the same sector among countries.
MSME productivity lags behind that of large companies
The MSME productivity gap—defined as the distance between MSME productivity and that of large companies—varies among countries. For example, in Kenya, MSMEs are just 6 percent as productive as large companies, translating to a hefty 94 percent productivity gap. Among the countries we investigate, MSMEs are relatively most productive in the United Kingdom, at 84 percent of the levels of large companies, translating to a productivity gap of only 16 percent. In general, the productivity gap is larger in emerging economies than in advanced ones.
As discussed in the previous chapter, within increasing income levels in emerging economies, MSME productivity rises steeply relative to that of large companies, whereas in advanced economies, the productivity of large companies rises noticeably.
The MSME productivity gap—defined as the distance between MSME productivity and that of large companies—varies among countries.
The size of MSMEs certainly plays a role in their productivity relative to that of large companies. Microenterprises trail large companies by a greater margin than do small and medium-sized ones, and microenterprises account for much more employment in the emerging economies in our sample.
Yet in our sample of advanced economies, only about 15 percent of the differences in MSME productivity among countries can be explained by the mix of micro-, small, and medium-sized enterprises. The rest of the variation comes from differences in sector mix as well as how MSMEs in each country fare at a subsector level.
Lack of scale matters more to the MSME productivity gap in some sectors than in others
Considering the broad sectors of our sample advanced economies, the MSME productivity ratio, averaged across economies, ranges from 49 percent in ICT to 104 percent in the administrative services sector. In other words, MSMEs in the ICT sector face the largest gap in productivity relative to large companies in ICT, while MSMEs in administrative services tend to outperform their large peers in productivity. Country-level differences within each sector are greatest in mining and utilities, and smallest in manufacturing and ICT.
Larger scale is generally associated with higher productivity. Yet being small has its advantages, too. Small businesses can be a vehicle for individuals to channel their entrepreneurial ambitions, as well as for people who simply own and run a business for a living. They shape our social fabric and day-to-day life in important ways and are trusted by citizens. In the United States, for example, MSMEs are considered the most trusted institutions by the general public, more even than the military or the police. While small businesses do not have as much time and resources to innovate as large companies, their relative advantage comes from being closer to customers, being less bureaucratic, and reacting nimbly to changing market dynamics. They are able to effectively mobilize local labor and offer flexible work arrangements.
Small businesses also play a crucial role in enabling the productivity of large companies, which tend to focus on core competencies and outsource less essential activities to other businesses, a phenomenon called work fissuring. This results in greater concentration of higher-value-added activities in large companies, with smaller businesses taking on lower-value work. Similarly, in many advanced economies, as waves of labor-intensive manufacturing moved to countries with low labor costs—often to MSMEs in those countries—higher-value work remained with larger enterprises.
Moreover, being engaged in higher-value work enables large businesses to build three types of competencies: intangible capital, which comprises both better technology and superior human capital; global connections; and financial capital. Consequently, the MSME productivity ratio tends to be lower, and the productivity gap wider, in sectors where these competencies play a significant role in driving business competitiveness.
- Intangible capital. In sectors like ICT, manufacturing, and professional services, intangibles drive a larger share of value added, and MSMEs have a wider productivity gap. Manufacturing productivity depends on organizational efficiency, the application of technology, and the effective utilization of capital—areas where scale makes a difference. In the mining sector, large companies have an advantage in undertaking explorations because they can invest effectively in acquiring geological information and in developing specialized know-how. In the ICT and professional services sectors, productivity drivers like automation, connectivity, and access to high-skill talent also become more powerful with scale. According to the World Bank Enterprise Surveys conducted between 2013 and 2022 and the OECD ICT Access and Usage by Businesses database, these are areas where MSMEs struggle. The share of MSMEs that adopt technologies like customer relationship management systems and artificial intelligence is only half the share of large companies. Large companies are twice as likely to provide formal skilling programs and are more active in monitoring performance and awarding performance bonuses. Large enterprises also contributed to 84 percent of research and development spending in the United States in 2015, spending more than five times as much as small businesses.
- In sectors where intangibles matter less to competitiveness, the MSME productivity gap tends to be narrower. In such sectors, companies drive productivity through local reach and access to lower-skill labor. Examples are accommodation and food services, administration and support services, trade, and transportation.
- Global connections. In sectors like manufacturing and mining, where exports drive a larger share of value added, MSMEs have a wider productivity gap with large companies. In trade, however, MSMEs actively participate in cross-border activities, likely driven by commodity brokering in wholesale trade. This translates into a 70 percent share for MSMEs in all trade exports and a higher MSME productivity ratio.
- MSMEs are typically less able than larger companies to gain access to global markets and benefit from global procurement. According to the World Bank Enterprise Survey, MSMEs derive just 5.0 percent of their total sales from direct exports, but large enterprises triple that. In emerging economies, on average, MSMEs account for 2.5 percent or less of exports. In Indonesia, for instance, only 1.5 percent of small enterprises and 10.0 percent of medium-sized enterprises participate in global value chains, compared with more than one-quarter of all large companies. Moreover, only about one-fifth of purchases of material inputs by MSMEs were of foreign origin, compared with more than one-third for large companies.
- Financial capital. Access to finance is the second most cited obstacle for MSMEs in the World Bank Enterprise Survey. In sectors like manufacturing, other services, transportation, construction, and trade, where businesses typically rely more on traditional financing, such as bank loans to secure working capital, MSMEs have a wider productivity gap. When the sector as a whole relies less on bank financing—perhaps because it is less necessary, as is the case in ICT—this may create a more level playing field, resulting in relatively smaller productivity gaps.
In addition to these competencies, small businesses may be disproportionately affected by a lack of public infrastructure, such as reliable logistics networks, access to basic utilities like uninterrupted power supply, and the availability of 5G. Large businesses often have the ability to establish their operations in areas with robust infrastructure. They also can develop infrastructure themselves, such as investing in power generators and building last-mile connectivity. While this enabler is critical for MSMEs overall, it is difficult to differentiate at the sector level.
Narrowing the productivity gap is equivalent to 5 to 10 percent of GDP
The tremendous variation in MSME productivity ratios across countries indicates potential for improvement. In any given country, overall productivity stands to gain when the ratio of MSME productivity to large company productivity is brought closer to its full potential.
That potential varies by country, given different underlying economic conditions. It depends on the industry structure in each business domain, as well as the specific nature of existing bottlenecks to growth, and the extent to which they are addressed to achieve the optimal economic structure. The productivity improvement itself may manifest in various ways. It could stem from some MSMEs increasing their productivity while remaining in their size bracket. Or it could result from a shift in the industry structure in which some small firms transition within the MSME category from micro to small or small to medium, or scale up to become large companies.
While meaningful benchmarks would vary based on local conditions, we compare the average ratio of MSME productivity to that of large companies in each country with the top quartile ratio across countries at a subsector level (see sidebar “Estimating the value of narrowing the productivity gap” for an overview of our approach). This exercise is a useful thought experiment to motivate an investigation of the specific drivers of MSME productivity and where to focus.
The gap between the actual productivity ratio and the top quartile level is equivalent to an average of 5 percent of GDP in advanced economies and an average of 10 percent in emerging economies. It ranges from 2 percent in Israel and the United Kingdom to 10 percent in Japan among advanced economies, and from 3 percent in Brazil to 15 percent in Indonesia and Kenya among emerging economies. On a per business worker basis, the amount is meaningful, ranging from about $3,000 in Israel to $12,900 in Japan among advanced economies, and from $3,200 in Mexico to $8,800 in Indonesia among emerging economies (all in purchasing power parity terms).
If we used lower thresholds to set benchmarks, the gap is lower, but still meaningful. For example, comparing the current MSME productivity ratio against the median ratio in each subsector, it is equivalent to 2 percent of GDP in advanced economies on average and 8 percent in emerging economies. Using bottom-quartile benchmarks, it would be about 1 percent of GDP on average in advanced economies and 7 percent in emerging economies.
Among advanced economies, the impact of narrowing the gap is larger in Italy, Japan, Poland, and the United States. In Japan, two-fifths of all MSME value added is in manufacturing and construction, where, in many subsectors, MSMEs achieve only the bottom quartile of performance across countries. Similarly, in Italy and Poland, MSMEs in two-fifths of subsectors are in the bottom quartile of performance. In the automotive trade, for instance, Poland has the highest productivity gap (73 percent) and Italy the second highest (67 percent) of our sample advanced economies. In the United States, MSMEs in almost half the subsectors are in the bottom quartile of the productivity ratio.
Where the overall gaps are smaller, as in Israel and the United Kingdom, the impact is limited. In these countries, about half the subsectors are already in the top quartile of MSME productivity relative to large companies.
The value is highest in four emerging economies—Kenya, India, Indonesia, and Nigeria—where MSME productivity gaps are the most substantial. In Kenya, the productivity of small businesses is the lowest of all the sample countries, explaining the wide gap. In Indonesia, the productivity of large companies is double that of the figure for other emerging economies, and therefore, its MSMEs have further to go.
The sectors that produce the most economic output account for the largest share of GDP, and improving their MSME productivity ratios. The three largest are trade, manufacturing, and construction (Exhibit 10). Nevertheless, some sectors in some countries punch above their weight relative to their role in economies. A standout example is ICT, particularly—in order of importance—in India, Nigeria, Brazil, the United Kingdom, Indonesia, and the United States. In these countries, the ICT sector contributes about 8 percent of economic value added on average, but about one-fifth of the value comes from narrowing the productivity gap. Other examples include transportation and storage in Australia, Kenya, and Israel; administrative services in Portugal, Kenya, and Germany; professional services in Nigeria and India; and accommodation and food services in Germany and the United Kingdom.
Strength in Numbers: How Global Hotel Alliance Creates Brand Value
https://hotelsmag.com/news/strength-in-numbers-how-global-hotel-alliance-creates-brand-value/
by David Eisen
Global Hotel Alliance (GHA) carries a distinction that makes it unique among affiliation networks: The hotel industry founded it. That’s right: In 2004, four hotel chains—Kempinski Hotels, Pan Pacific Hotels and Resorts, Rydges Hotels & Resorts, and Wyndham International— banded together to create an alliance that closely mirrored the airline model.
Since then, GHA has grown exponentially to include more than 50 brands and 1,000 hotels across 100 countries, billing itself as the largest alliance of independent hotel brands. This year is already off to a fast start with Q1 hotel revenues up 24% YOY to $921 million.
Contributing to the revenue uptick is GHA’s loyalty program, GHA DISCOVERY, whose membership increased to 35 million globally. One of its features is its digital rewards currency—DISCOVERY Dollars (D$)— which diverges from traditional points programs. Unlike programs that accumulate points for free nights, D$ (D$1 = US$1) can be converted to any currency and used like cash at any of GHA’s hotels worldwide, including toward room charges, F&B or spa treatments, etc. It’s been a success: Cross-brand revenue, an indicator of program engagement, grew 40% to $135 million in Q1, as members show a desire to stay across multiple brands within the alliance.
Last year, GHA generated $3.2 billion of revenue through the loyalty program. In charge of it all is Chris Hartley, CEO of Global Hotel Alliance, who has made it his mission to grow the network, impressing hotel brands on the value and power in numbers as a way to bolster their awareness and, ultimately, profit.
HOTELS Magazine spoke with Hartley to discuss GHA’s milestones, its value, its traditions, and what is really driving customer loyalty today.
Chris Hartley, CEO of Global Hotel Alliance, has held the position for 20 years.
HOTELS: GHA bills itself as the world’s largest alliance of independent hotel brands. Why is it so important for independent brands to collaborate, given today’s hospitality landscape?
Hartley: We’re really looking to asset owners who have a bigger group of hotels. In today’s highly consolidated landscape, scale matters, particularly in distribution, technology, margin protection and customer acquisition. With limited resources to reach new customers and limited reasons for existing customers to book direct, independents usually rely heavily on costly third parties, such as OTAs, who command meaningful commissions, a direct hit to the bottom line. For independent brands, the path forward isn’t about becoming bigger on their own; it’s about being more strategic and more connected. Those that can retain their independence while accessing shared platforms, insights and scale will be best positioned to compete and thrive.
HOTELS: What is GHA able to provide brands that allow them to compete on a higher level with the larger groups that may have higher marketing spend and distribution?
Hartley: GHA helps independent hotel brands compete, expanding their global reach, driving incremental revenue and reducing dependence on third-party channels, all while maintaining management independence and individual positioning. By leveraging GHA’s shared loyalty program, independent hotel brands can access new markets and customers they couldn’t reach cost-effectively on their own. The GHA DISCOVERY program gives a brand’s existing customers more reasons to book through direct channels by offering them loyalty recognition, benefits and rewards. By shifting distribution from costly OTAs (in some cases, over 50% of their business) to brand direct or GHA DISCOVERY channels, hotels save up to 15% in commission, which flows straight to the bottom line for asset owners. Our brands all share the one GHA DISCOVERY loyalty program, with one tier structure and base set of hotel benefits underpinned by one D$ currency that can be earned and spent across all hotels. Member brands can also customize the program with their own marketing and benefit delivery to reflect their individuality.
The terrace of the Dome Penthouse at Hotel Café Royal in London.
HOTELS: Loyalty programs are a huge component of hotel companies’ overall strategy to expand their share of guest wallet. Do you see an increase in the importance of loyalty programs?
Hartley: Our most recent research found that 87% of respondents would choose a hotel that is part of a global loyalty program over a similar hotel that isn’t. Loyalty programs have evolved from a recognition tool into a powerful driver of customer choice: they influence both the choice of hotel and they influence the booking channel, delivering a double impact on profitability. A significant advantage of our program is its scale and customer appeal. GHA DISCOVERY encompasses 1,000 hotels, offering its 35 million members a broad choice spanning over 100 countries and an eclectic mix of upscale and luxury brands.
HOTELS: How has loyalty changed? What do guests really want in a program?
Hartley: Loyalty has evolved from points-based systems to entire travel eco-systems, offering value along the entire customer journey. Even the most frequent travelers are only on the road perhaps 30-40 days a year, so how do you engage them during the remaining 330 or so days? Today, hotel loyalty programs have expanded to offer benefits when not traveling, as we are starting to do in restaurants. Credit card, retail and other affiliations ensure hotel loyalty programs enrich everyday life.
The PARKROYAL COLLECTION Pickering, Singapore, is renowned for its “hotel-in-a garden” design.
HOTELS: The U.S. remains a focus for growth. How is that coming along?
Hartley: We continue to pursue every partnership opportunity that gives us access to the U.S. market. Despite our limited presence in the U.S., it’s our number one international demand driver, generating $400 million in revenue in 2025.
HOTELS: GHA has a rich history with many storied brands as members. How does GHA use this heritage to not only promote brands but also expand the network?
Hartley: Travelers are largely bored with the standard fare of the lookalike brands, and are seeking hotels with more stories to tell that are part of local culture or history, such as Kempinski, Corinthia, Pan Pacific, Lungarno, Leela, which are icons in their local markets. Rather than standardizing experiences, the alliance celebrates this diversity. This positioning not only enhances guest appeal but also attracts like-minded independent brands looking to retain their character while benefiting from global scale, supporting continued expansion of the alliance.
Mews survey shows the ubiquity of AI in hotel operations
https://hotelsmag.com/news/mews-survey-shows-the-ubiquity-of-ai-in-hotel-operations/?
A new survey from Mews shows 98% of hoteliers have used AI across their operations in the last six months. On average, AI is involved in 11 of the 19 most common hotel tasks and handles more than half the workload in those tasks. Adoption spans front office, commercial, food and beverage, and leadership functions, and is highest among upper-midscale, upscale, and luxury properties.
Despite widespread adoption, 59% of hoteliers say front desk welcome and check-in should remain human-led. The finding is most pronounced among properties already using AI extensively.
The Mews Hotelier Survey 2026 was conducted between December 2025 and March 2026 across more than 500 properties globally. Key findings include: 92% of hoteliers are optimistic about AI in hospitality; 83% trust AI tools to support decision-making; and 41% have no formal AI policy in place. Properties with a formal AI policy report 92% strong trust in AI, compared to 49% among those with no guidelines.
Among the most AI-proficient properties, 52% identify revenue growth as the primary outcome they want AI to support, ahead of efficiency or cost reduction.
“The data tells a consistent story: hoteliers are optimistic about AI and willing to use it broadly, but they are also precise about its role,” said Wouter Geerts, director of market research at Mews. “Comfort with AI goes up with experience, and so does the conviction that certain guest moments should stay human. That is not resistance to AI. It is a mature understanding of what it is for.”
“Hotels have spent the last few years getting the operational foundations right. What we are seeing now is a shift in how hoteliers think about AI,” said Matt Welle, CEO of Mews. “The question is no longer whether to use it, but where it creates the most value. And that requires AI that understands how a specific property works. That is what we are building with the semantic layer: a foundation that gives every AI tool the context it needs to act correctly for that hotel, not just for hotels in general.”
Mandarin Oriental launches standalone residences in Abu Dhabi
https://hotelsmag.com/news/mandarin-oriental-launches-standalone-residences-in-abu-dhabi/
Mandarin Oriental has announced Emirates Palace, Mandarin Oriental Mansions, a collection of 35 ultra-luxury standalone branded residences within the grounds of the legendary Emirates Palace, Mandarin Oriental, in Abu Dhabi. Handover is anticipated for 2029.
The development is owned by Emirates Palace Company (EPCO) and built in partnership with LEAD Development. Mandarin Oriental will deliver bespoke residential services to the mansions on behalf of the owner.
Positioned along one of the UAE’s most significant natural shorelines, each mansion draws design inspiration from Abu Dhabi’s coastal heritage, expressed through a contemporary aesthetic anchored by courtyards, gardens and panoramic sea views.
Residents will have access to a private residents’ lounge featuring a signature Mandarin Oriental tea library, private meeting rooms, a residential-style bar, a beach club with private cabanas, a kids’ room, a golf simulator and a chef’s table.
“This development represents a significant addition to the urban landscape of the Emirate of Abu Dhabi and reflects the growing confidence in its real estate sector, said H.E. Humaid Matar AlDhaheri, board member of EPCO. “Its association with Emirates Palace grants it exceptional value, as the Palace is considered one of the region’s most iconic landmarks. This, in turn, contributes to reinforcing Abu Dhabi’s position as a capital of urban innovation and quality of life.”
“Building within the grounds of Emirates Palace is a responsibility we do not take lightly,” said Mounir Haidar, co-founder of LEAD Development. “Our mission is to ensure the residences belong naturally within the broader architectural and cultural context of the Palace and Abu Dhabi. This is not simply a residential address but part of placemaking hospitality with a context that will continue to further position Abu Dhabi as a unique destination in the region.”
“Abu Dhabi continues to distinguish itself internationally through the depth of its cultural identity, the quality of its hospitality, and the clarity of its long-term vision,” said Laurent Kleitman, group chief executive of Mandarin Oriental. “Emirates Palace, Mandarin Oriental Mansions, allows us to further our relationship with the capital through a residential experience rooted in discretion, craftsmanship, and thoughtful service. We are honored to contribute to a setting that holds such significance within the region.”
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