Baggage expenses and other “extra” charges are unavoidable for the current air vacationer. They can be expensive and irritating. But they are gravy for the airline carriers. A new study suggests they add up to hundreds of millions for the market.
How the new report adds up
The market was able to acquire $21.46 billion just last year from luggage fees, frequent-flier programs, co-branded charge cards and other non-transportation fees, reports the Amadeus Review of Ancillary Revenue Results.
Top dollar earners
About $5 billion was brought in in extras with United Continental Airlines, which was probably the most non-transportation money an airline brought in. Second was Delta, at $3.7 billion. The third was American Airlines at $2 billion. All of them are companies based in the U.S.
Having a low spending budget means revenue comes from extras
There are usually lower ticket costs and shorter-distance flights with bargain airlines. This means generating income demands extra fees. They lead the pack if the data is analyzed as a percentage of their total income. Of the airline carriers analyzed, Allegiant Airlines made 29.2 percent with these extra charges making it the top earner. The next two integrated Spirit Airlines at 22.6 percent and Ireland-based Ryanair at 22.1 percent.
Expect an increase in expenses soon
Soon, non-transportation fees are sure to go up, according to co-author or the study and president of IdeaWorks Jay Sorenson. “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.”
Study done previously
Another study was done earlier this year by the Washington D.C.-based lobby group Customer Travel Alliance. The study was done with a coalition of travel agencies with Open Airlines for Airfare Transparency. The study found that in 2010, air passengers paid an average of $36.80 in expenses for every round trip.
Government being pressured
In an attempt to try to get the federal government to change how flight companies work with expenses, two groups collected over 60,000 online signatures, as of last March.
Articles cited
MSNBC
overheadbin.msnbc.msn.com/_news/2011/06/01/6764501-nickeled-and-dimed-for-21-billion
Denver Business Journal
bizjournals.com/denver/news/2011/03/10/airlines-cost-coloradans-1486m-in.html?ana=RSS&s=article_search
Business Week
businessweek.com/ap/financialnews/D9IBOU7G6.htm
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