Airlines Made Over $38 Billion From Extra Fees Last Year
A new study shows non-fare revenue growing “by every measure,” especially among major U.S. carriers.
Extra fees for things like oversized luggage, “last minute” ticketing, and seats with increased legroom are on the rise at commercial airlines across the industry, and a new study shows that three major U.S. carriers are leading the charge. United, American-U.S. Airways, and Delta were the top three earners of non-fare revenue last year, raking in over $13.6 billion combined, according to a new report from IdeaWorksCompany and CarTrawler.
The 63 airlines they surveyed earned $38.1 billion in ancillary revenue in 2014, reflecting more than a 20 percent increase over the $31.5 billion reported in 2013.
Though huge gains from “à la carte” upgrade options that were once a given is the most frustrating part of this picture for consumers, it should be noted that 2014’s increase in passenger traffic was also a major factor in the revenue bump. Meaning there weren’t just new fees, but more travelers to hit with new fees. Major carriers also made a lot of money from the sale of miles or points to banks that issue co-branded credit cards. American Airlines earned $624 million from its co-branded credit card with Citibank.
“Ancillary revenue is an increasingly important indicator of commercial success, and a major contributor to the bottom line of airlines across the globe,” says Michael Cunningham, Chief Commercial Officer at CarTrawler. “It is no longer just the preserve of low cost carriers—it is something from which all airlines are benefiting. The question is not who is doing it, it’s how well it is being done.” Pretty well, apparently!