Passengers love to grouse about the extra fees airlines now charge for everything from checking bags to choosing seats, but they are paying up – and up.
In 2014, airlines earned $38.1 billion from fees charged for retail activities, a la carte services, frequent flier miles sold to partners and other so-called ancillary fees, according to a report from IdeaWorksCompany and CarTrawler.
That’s $6.6 billion more than the $31.5 billion that IdeaWorks tallied in 2013 and $35.6 billion more than the $2.45 billion in fees earned by airlines in 2007, the first year the study was conducted.
“The numbers are going up in part because more airlines are doing it,” said Jay Sorensen, president of IdeaWorks, “But also because more airlines are talking in their financial filings about what they’re doing to earn ancillary income. In fact, some are quite proud of their accomplishments.”
In its newly released 2015 Yearbook of Ancillary Revenue, IdeaWorksCompany scoured the financial filings of 130 airlines for 2014 and found 63 that disclosed revenue for extras such as a frequent flier miles sold to credit card companies, bag fees and onboard meals.
Among the findings:
- Spirit Airlines, which trumpets “Bare Fares” and charges for everything from water to printing boarding passes at the airport, earned almost 39 percent of its total revenue from ancillary fees in 2014 – more than any other airline in the study. The carrier took in $76.2 million from assigned seating fees alone and earned an average $56 in ancillary revenue from each passenger;
- Ancillary revenue brought in $5.86 billion for United, $4.65 billion for American/US Airways and $3.2 billion for Delta Air Lines;
- Average ancillary revenue per passenger for all the airlines was $17.49 in 2014, which is 8.5 percent more than in 2013;
- Ancillary revenue among low cost carriers jumped by more than $2.9 billion, or 32.8 percent, while ancillary revenue among US major U.S. airlines increased more than $2.6 billion, or 18.7 percent;
- Alaska Airlines, which this year introduced a seating option called Preferred Plus (offering extra legroom, priority boarding and a free drink), is expected to begin earning at least $15 million a year from the program;
- And JetBlue, which this year added bag fees and a booking bundle that combines fares with a checked bag and reduces or waives change fees, could net more than $200 million from its new program.
The list of extra charges faced by airline passengers can seem endless, and new fees for everything from flying on child-free flights to being first to exit the plane on arrival have been bandied about. But Sorensen doesn’t see much new coming in terms of new fees.
“Airlines all over the world are already selling whatever they can. They’ll just get better at pricing these products – and better at selling them,” he said.