Airlines “earned” $22.6 billion last year charging for what used to be free, according to the latest research by IdeaWorksCompany and Amadeus.
“Ancillary” typically means “in addition to,” but Jay Sorensen, president of IdeaWorks – no, that’s not a typo; it’s all one word - says in a blog post that more and more airlines consider these fees to be a regular source of revenue to count on.
Extra fees for Spirit Airlines, the King Of Ala Carte Airlines, for example, accounted for a third of its total revenue. Several airlines earned more than 20 percent of total revenue on add-ons. Although these extra fees are usually associated with low-cost carriers, traditional airlines take up all but three of the Top Ten.
For example, extra fees averaged out to $36 per passenger for United Continental, which sits atop the ranking with total ancillary revenue of more than $5 billion.
The research doesn’t break down what type of fees make up the totals. From all of what we’ve read elsewhere, however, we think it’s a safe bet to assume baggage fees comprise the majority.
But there are plenty of other add-ons. Interestingly enough, Southwest Airlines, appears on the Top 10 for the first time. While it’s famous for not charging for bags, the airline collects for its EarlyBird service and its Business Select program. The most effective ancillary revenue generator for Southwest is a revamped frequent fliers program, along with a co-branded credit card companion.
While we’ll still never forget our one and only trip on Spirit, Sorenson says all these extra fees are good for the consumer.
“ … the free amenities in the economy cabin had been cost-cut to virtual nothingness,” he writes. “Ancillary revenue methods allow consumers to add convenience, comfort and value to the travel experience.”
