Little extras equal billions for airlines

airline baggage

Baggage fees and other extra costs are big bucks for airlines. Image: Payton Chung/Flickr/CC BY

The baggage fees and the other little extras charged by modern airlines can be expensive and annoying for the traveler. But they are gravy for the airlines. A new report suggests they add up to billions for the industry.

New report adds up the extras

A newly released report, the Amadeus Review of Ancillary Revenue Results, says baggage fees, frequent-flier programs, co-branded credit cards and other non-transportation fees earned the industry $21.46 billion last year.

Top dollar earners

The airline that brought in the most non-transportation money United Continental Airlines, which brought in $5 billion in extras. Second was Delta, at $3.7 billion. American Airlines, at $2 billion, was the third largest earner. All of them are companies based in the U.S.

Low-budget means extras are high percentage of revenue

Bargain airlines, however, with their lower ticket costs and shorter-distance flights, depend more on those extra fees to generate income. They lead the pack if the data is analyzed as a percentage of their total income. The big three earners, percentage-wise, were Allegiant Airlines, at 29.2 percent, Spirit Airlines, at 22.6 percent, and Ireland-based Ryanair, which brought in 22.1 percent of its revenue with those little extras.

Fees likely to go up

Jay Sorensen, co-author of the report and president of IdeaWorks, believes that more non-transportation fees will coming soon. “Oil prices spiked in 2008, which was also the year in which the U.S.industry introduced baggage fees. We’re nearing those historical oil prices again, and I believe we’re going to see another round of new à la carte fees.”

An earlier study

The Consumer Travel Alliance, a Washington D.C.-based lobby, did a similar study earlier this year. Its study was done in conjunction with Open Airlines for Airfare Transparency, a coalition of travel agencies. The study found that in 2010, air passengers paid an average of $36.80 in fees for every round trip.

Urging government pressure

The two groups have collected, as of last March,  more than 60,000 online signatures in an attempt to urge the federal government to to force airlines to make their fees more transparent.

Denver Business Journal
Business Week

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