A newly released study shows that airlines around the globe are raking in cash from ancillary revenue like baggage fees. Worldwide, carriers collected $13.5 billion in fees last year, an increase of 43% over the previous year. And sitting high atop that pile was United Airlines.
United may only be the third-largest carrier in the U.S. (at least until they get their merge on with Continental), but they beat out both Delta and American in collecting ancillary revenue last year with a total of $1.9 billion. About $400 million of that coming solely from fees for checked bags.
By comparison, the overseas airline with the highest revenue from fees was Australian airline Qantas, who took in around $963 million in 2009.
Coincidentally, yesterday United’s president made a statement that he thinks we’ve only seen the tip of the iceberg in terms of money that could be made from charging fees.
“I don’t think we’re very far along, frankly,” John Tague said during a discussion of the airline’s earnings. “That might be surprising to people given where we are in terms of ancillary revenue generation.”
Tague theorizes that the airline could someday generate over $1 billion from just checked-bag fees alone: “It appears that the trend is firmly in place, and that over time more and more bags will be assessed fees.”
While those of us who aren’t airline executives aren’t generally pleased with all the extra fees that have sprung up in recent years, one of the authors of the new study believes that deal-seekers will ultimately benefit from this nickel-and-diming:
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… Anyone who wants a different experience will pay more.
Of course, he’s assuming that what’s left-over after you’ve stripped away all those extras is still a reasonable fare.
Airlines bag big bucks from fees [Chicago Tribune]