It doesn’t take a rocket scientist to realize that airline fees are taking flight. Even fliers who happen to catch a sale may suffer from sticker shock when they see the itemized charges on their receipt.
The airline industry, beset by spiraling costs and bad publicity from high-profile incidents involving passenger behavior, has slowly been finding new and lucrative ways to tack on additional fees.
Called ancillary fees, these charges were somewhere in the $22 billion range worldwide in 2010. Six years later, that figure was expected to balloon to $67.4 billion, according to Idea Works Company and Car Trawler, companies that track ancillary revenue activity.
Here are the fees making your airline tickets cost more
The airline with the most ancillary offers is United, followed by Delta Air Lines, according to the Financial Times.
Generally, airlines are moving away from ticket prices as their main source of revenue and looking at ways to charge for other things.
Ancillary airline fees include things such as:
- frequent flyer miles
- vacant seat-bidding
- lounge access
- ability to switch seats (This is more a discretionary charge; some airlines charge for this on certain flights, other times they don’t)
Money expert Clark Howard says that many of the major airlines are also doing a bait and switch, in which their cheapest fares are listed on third-party sites such as Expedia, Travelocity and the like, but fliers soon learn that these no-frills fares offer no flexibility whatsoever and often involve a charge for seat-changing or baggage.
“The whole idea is to show up on those fare searches that most people now do on the multi-airline search engines like Google.com/Flights, Kayak.com, Expedia, Travelocity.com, anything like that,” Clark said. “A lot of times people are buying these flights on third-party sites and people don’t know what is going to happen to you.”
In many cases, fliers are stuck with huge, last-minute fees at the gate, and a penalties on top of that, Clark said.
In addition to adding fees to basic economy flights, many carriers are doubling down on ancillary charges as a way to increase the cost of an airline seat.
“Airline management teams have clearly identified ancillary revenues as a way to add incremental, high-margin revenue to the core seat product offer,” Anand Date, aviation analyst at Deutsche Bank, was quoted as saying.
With $1.1 billion generated in 2016, discount carrier Spirit Airlines has the largest proportion of ancillary revenue, according to an analysis from the Financial Times. Among the major carriers, United Airlines made $6.2 billion in ancillary funds, but it only accounted for 17% of the carrier’s sales. Delta came in next with $5.2 billion, followed by American with $4.9 billion and Southwest with $2.8 billion.
With increased pressure from the low-cost carriers, it is unlikely that customers will see an end to ancillary costs anytime soon.
The three full-fare airlines are having a difficult time dealing with the mid-priced carriers that offer vastly superior service than them,” Clark says.”And they are being twisted into a pretzel by the really, really cheap fares offered by the hard discounters that don’t have a good product.”