Those extra fees at the airport really add up. This year, airlines worldwide will collect $36.7 billion from baggage fees, sales of in-flight beverages and food, and other a la carte services provided to passengers at a cost. That is the highest fee total on record, and next year it is expected to be even higher.
The total revenue from these ancillary services increased 29 percent from 2014, according to a report from IdeaWorksCompany and CarTrawler. Among the six major U.S. carriers, revenue from a la carte services jumped more than a third, to $7.4 billion this year.
“The result from this year demonstrates the growth of ancillary revenue is far from abating,” says Jay Sorensen, president of IdeaWorksCompany, who also predicted that the amount of revenue will increase next year, but declined to forecast by how much.
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“When you give away something for free, a bag of nuts, a coffee or other beverage, that tends to satiate most customers for the flight and they tend not to open up their wallets,” Sorensen says. “When you charge for everything, they spend more and often more than they expected.”
Sorensen says that the increase in 2016 will come from two sources. First, airlines will fine-tune how they price these a la carte services to drive up revenue. That could mean simply increasing fees for such services as checked bags. Or, airlines may lower fees to convince more people to pay for the service and ultimately boost overall revenue.
Second, airlines are working with travel agencies to change their booking software, so customers can choose to prepay fees while buying their tickets. Passengers already can choose to pay more for legroom or checked bags as they book through the airline’s website.
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The report cited 23 airlines that were aggressive in charging for a la carte services, including four North American carriers: Allegiant, Frontier, Spirit and Volaris. However, Sorensen pointed out that these airlines are “without exception” known for offering some of the lowest fares available.
