Airlines Are Earning Record Revenues From All Those Extra Fees
Business + Economy

Airlines Are Earning Record Revenues From All Those Extra Fees

© Reuters Staff / Reuters

Airlines raked in a record $40.5 billion in baggage fees, food sales and other a la carte services, according to a new report from the IdeaWorksCompany.

In addition to fees for in-flight services, airlines are also earning ancillary revenue through the sale of frequent-flier miles and commissions for packaging hotel and tour reservations along with the flight.

Related: America’s Favorite Airlines, Ranked

The three largest U.S. carriers made the most money on fees, with United topping the list after earning $6.2 billion in ancillary revenue, including $3.2 billion in fees and $3 billion in the sale of frequent flier miles.

Airline Fees

With $4.7 billion in ancillary revenue, American Airlines came in second place, and Delta rounded out the top three with $1.5 billion in ancillary revenue.

On a per-passenger basis, Spirit airlines earns the most money ($51.80), charging for everything from assigned seats to the privilege of talking to a customer service rep on the phone. Spirit’s ancillary earnings make up more than 43 percent of its revenue, the highest percentage of any airline.

The report authors believe that the shift to a la carte pricing reflects consumer demand for low-cost tickets and that fees will continue to grow as a revenue source for airlines. “The array of choices provided by a la carte methods allows these consumers to click and pay a premium for more comfort and convenience,” the report states. “Ancillary revenue represents the safety net which determines whether low fares can coexist with airline profitability.”