Airlines turn nickel and diming into $49.9B
If you're tired of feeling nickel and dimed by airlines charging fees for a host of activities, here's some bad news: They're getting better at it.
According to a new study by CarTrawler, airlines this year are expected to generate an all-time high of $49.9 billion in ancillary revenues worldwide. That would amount to a 17.2 percent increase in fees compared to those in 2013, according to the report.
"The airlines are becoming better retailers on their websites and mobile apps when it comes to selling services and upgrades," said Jay Sorensen, president of IdeaWorks, which conducted the annual study in conjunction with CarTrawler. "At the same time people are adjusting their expectations and becoming more accustomed to these fees, and they are paying them."
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In just five years, the amount of money airlines have collected from fees and services has more than doubled. Sorensen said the average passenger taking a flight somewhere in the world this year will pay $15.02 in ancillary fees
There are two reasons behind the surge.
First, the number of people taking commercial flights around the world has risen to 3.32 billion, according to an estimate from the International Air Transport Association. With more people flying, there are more people to collect fees from.
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The second factor is the growing use of fees by foreign carriers.
"We're seeing more activity by the traditional airlines in Europe," Sorensen said. "Some airlines, such as SwissAir and Lufthansa, are now charging passengers for assigned seats in coach. So if you want a particular seat on certain flights, you will have to pay for it."
Ancillary revenue growth
| 2014 | $49.9 Billion | (up 17.2%) |
| 2013 | $42.6 Billion | (up 18.1%) |
| 2012 | $36.1 Billion | (up 11.1%) |
| 2011 | $32.5 Billion | (up 43.8%) |
Some foreign carriers are also starting to sell passes for access to their lounges. That's a change from the past, when the only people allowed in those lounges were elite passengers, or those who paid for an annual membership.
Meanwhile, Asian airlines are also charging passengers more for particular services or options.
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"There's à la carte pricing everywhere in the world," Sorensen said.
The CarTrawler report comes just weeks after almost every airline based in the U.S. posted much better-than-expected earnings results. A combination of strong demand for travel in the U.S., ancillary revenue growth and moderate jet fuel prices are all contributing to domestic carriers posting some of their biggest profits ever.
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