Airlines have been making big money off fees ever since 2008, when American Airlines started adding a $15 charge to check a bag. Now, fees are more important to airlines than ever according to a report from IdeaWorks which notes this money accounted for a third of Spirit Airlines’ revenue in 2011.
Listen as airfare analyst Rick Seaney explains why fees are here to stay:
Spirit Fees: 33.2% of Revenue
That ancillary fees made up 33.2 percent of all revenue for the discount carrier may not surprise anyone who’s flown Spirit lately. The self-styled ultra low-cost carrier’s roster of optional fees is long and varied, ranging from charges for water and coffee to carry-on bag fees and much more.
Other airlines also seeing big benefits from fees are Nevada-based Allegiant which derives 27 percent of its revenue from fees, and Ireland’s Ryanair, which rakes in 20 percent from fees.
Qantas: Top Airline for Fees per Passenger
Interestingly, Spirit did not top the list in terms of fee revenue per passenger – that honor went to Australia’s Qantas (nearly $50 per passenger) with Spirit ranked number two (just over $40 per passenger). United Airlines was the ranking U.S. legacy carrier on the list (about $35 per passenger).
Fees Jump Tenfold Since 2007
The report looked at fee revenue from 50 airlines around the world that disclose this information and discovered that from 2009 through 2011, this ancillary revenue jumped by 66 percent. Go back a couple of years earlier and the results are even more dramatic:
- 2007 – $2.45 billion in fee revenue
- 2011 – $22.6 billion in fee revenue
Note: Only 23 airlines reported ancillary revenue in 2007, compared to 50 in 2011.