Airlines around the world are grabbing cash from ancillary revenue like baggage fees. Oh yeah, it's a whole hell-of-a-lot of money. Altogether, carriers worldwide collected $13.5 billion in fees last year, a jump 43 percent higher than the previous year.
UNITED'S ANCILLARY REVENUES ARE HIGHEST
At the top of the heap was United Airlines. Still the third-largest carrier in the U.S. behind Delta and American, United made a total of $1.9 billion in ancillary revenue -- $400 million coming from fees for checked bags alone, according to a new study.
Overseas, the airline with the largest revenue from fees was Quantas. For comparison to United's $1.9 billion, the Australian airline took in around $963 million last year, about half of what United racked up.
Today, flying is like going to the movies. You gotta pay to get in, but the theater-owners make more money from selling popcorn and candy.
The above financial information comes from a new study on the airlines, sponsored by Amadeus (a huge clearinghouse for airline transactions), with financial analysis by Idea Works (a consultancy which advises airlines on ancillary revenue strategy and tactics).
Each major U.S. carrier, with the exception of Southwest Airlines, instituted luggage fees in 2008, stating they need additional revenues to pay for increasingly high oil prices and then the collapse in business travel due to Wall Street's meltdown.
WE'RE IN THE MONEY!
All those luggage fees, along with other ancillary charges, have made most major airlines profitable again, but they sure aren't inclined to rescind the unpopular charges. Are you kidding? Fees are here to stay and over time, there will be more and more assessed fees.
Right now, only around 40 percent of United passengers pay to check bags. But more ancillary costs include carriers' affinity card programs and higher commissions on hotel rooms and rental-car bundles packaged with airfares.
MORE & MORE NEW FEE EXPERIMENTS
Oh yes, apparently the airlines are experimenting with upgraded onboard meals. Plus, they're letting passengers buy one-day access to priority security lines and lounges that used to be reserved for first-class customers only.
Might just as well forget wishing for the days when airlines provided full service at no extra cost.
FUTURE TRAVEL COST SQUEEZE
"In the future, if the consumer wants to squeeze travel costs down to next to nothing, he or she will buy online, maybe pay with a debit card, won't have an assigned seat, bring a snack from home and will have a carry-on," predicted Jay Sorensen, president of Idea Works, one of the study's authors.
"Anyone who wants a different experience will pay more."
by Sharon McEachern