Can Anyone Stop the $38 Billion Airline Fee Squeeze?

Can Anyone Stop the $38 Billion Airline Fee Squeeze?

People are seen in the United Airlines terminal at Newark International Airport in New Jersey, July 22, 2014.  REUTERS/Eduardo Munoz
By Beth Braverman

U.S. airlines earned $2.6 billion in fees and frequent flier mile sales in 2014, an 18.7 percent increase from 2013,  according to an annual report by consultancies IdeaWorks and CarTrawler.

That represents the eighth consecutive year that carriers saw substantial revenue ancillary to ticket sales. Globally, ancillary revenue soared more than 20 percent to $38.1 billion.

“Ancillary revenue is an increasingly important indicator of commercial success, and a major contributor to the bottom line of airlines across the globe,” said Michael Cunningham, CarTrawler’s Chief Commercial Officer, in a statement.

Related: 6 Sneaky Fees that Are Making Airlines a Bundle

By passenger, additional revenue grew by 8.5 percent to $17.49. Low cost carriers increased ancillary revenue by 32.8 percent for the year, or $2.9 billion.

Ten airlines earned two-thirds of the ancillary revenue, led by United Airlines, American/U.S. Airways, and Delta. Delta brought in $350 million through its Comfort Plus program, which allows passengers to pay extra for more legroom and priority boarding.

Among passengers’ most hated fees are checked bag fees. Airlines typically charge $25 for the first bag, $35 for the second, and more than $100 for a third bag.

As frequent fliers turn to branded credit cards as a means of avoiding fees, airlines are still earning money. Last year, American’s Citibank-issued credit card, which gives consumers one free checked bag and priority boarding, yielded an additional $624 million for the carrier last year.

The additional fees are not improving the customer experience. More than 60 percent of consumers surveyed by the U.S. Travel Association in March said they were frustrated with air travel generally.

Chart of the Day: Long Way to Go on Coronavirus Testing

Healthcare workers with ChristianaCare test people with symptoms of the coronavirus in a drive-thru in the parking lot of Chase
Jennifer Corbett
By The Fiscal Times Staff

The White House on Friday unveiled plans for a new effort to ramp up testing for Covid-19, which experts say is an essential part of limiting the spread of the virus. This chart from Vox gives a sense of just how far the U.S. has to go to catch up to other countries that are dealing with the pandemic, including South Korea, the leading virus screener with 3,692 tests per million people. The U.S., by comparison, has done about 23 tests per million people as of March 12.

After Spending $2 Billion, Air Force Bails Out on Planned Upgrades of B-2 Bombers

The B-2 Spirit stealth bomber flies over the Missouri Sky after taking off from the Whiteman Air For..
© Hyungwon Kang / Reuters
By The Fiscal Times Staff

The Air Force has scrapped a planned upgrade of its B-2 stealth bomber fleet — even after spending $2 billion on the effort — because defense contractor Northrup Grumman didn’t have the necessary software expertise to complete the project on time and on budget, Bloomberg’s Anthony Capaccio reports, citing the Pentagon’s chief weapons buyer.

Ellen Lord, the undersecretary of defense for acquisition and sustainment, told reporters that the nearly $2 billion that had already been spent on the program wasn’t wasted because “we are still going to get upgraded electronic displays.”

Big Hurdle for Sanders’ Plan to Cancel Student Debt

Chip East / REUTERS
By The Fiscal Times Staff

Bernie Sanders wants to eliminate $1.6 trillion in student debt, to be paid for by a tax on financial transactions, but doing so won’t be easy, says Josh Mitchell of The Wall Street Journal.  

The main problem for Sanders is that most Americans don’t support the plan, with 57% of respondents in a poll last fall saying they oppose the idea of canceling all student debt. And the politics are particularly thorny for Sanders as he prepares for a likely general election run, Mitchell says: “Among the strongest opponents are groups Democrats hope to peel away from President Trump: Rust Belt voters, independents, whites, men and voters in rural areas.”

Number of the Day: $7 Million

NY mayor cites climate stance in endorsing Obama
By The Fiscal Times Staff

That’s how much Michael Bloomberg is spending per day in his pursuit of the Democratic presidential nomination, according to new monthly filings with the Federal Election Commission. “In January alone, Bloomberg dropped more than $220 million on his free-spending presidential campaign,” The Hill says. “That breaks down to about $7.1 million a day, $300,000 an hour or $5,000 per minute.”