What is the purpose of baggage recheck?

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In a generic sense, "Baggage Re-check" is used to drop your checked baggage where you have been forced to collect it part-way through your trip, AND where the baggage has been "tagged" to somewhere further along from where you collected it.

The normal reason you need to collect your bags in the first place is in order to carry your bags through customs - but whether you need to do that or not will depend on the exact situations.

The most obvious case is somewhere like the US, where all (*) passengers are required to carry their bags through customs, so every passenger arriving on an international flight into the US is required to re-claim their bags, take them through customs, and then drop them at the baggage re-check.

(* In practice a small number of US airports have facilities where some passengers connecting to an international flight can avoid this, but lets ignore them for now!)

Then there are countries like Australia where passengers connecting to an international flight do not need to collect their bags, but anyone connecting to a domestic flight will need to collect their bags, take them through customs, and then re-check them.

Within Europe (or at least, European Union countries) you generally take your bags through customs at your final destination. However, not all airports have customs facilities, and if you are connecting from an international flight to an airport without customs facilities then you need to collect your bags at the connecting airport, take them through customs, and then re-check them.

However, the number of airports in the EU without customs facilities is small, and the number of passengers travelling to such cities is also small (especially on a single ticket), so as a result very few people will actually use the re-check area - as you discovered!

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