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Published on Wednesday, November 29, 2017

US airlines will rake in a record USD57 billion in fees this year



US airlines will likely bring in a record $57 billion in fees this year according to a joint study by consulting firm IdeaWorks Company and Cartrawler.


On a global level, airlines around the world are on track to pocket a total of $82.2 billion in 2017, which represents more than 10% of total airline revenues for the first time.


Each passenger journey generates an average of just over $20 in ancillary fee revenue for airlines based on an expected 4.1 billion passengers this year.


That contrasts with just $4.54 per passenger in 2010.


The study includes the usual added fees for things like checked bags, seat selection and in-flight meals, but also commissions from hotel bookings and the sale of frequent flyer miles to partners.


"The economic boon of ancillary revenue has proven to be a highly useful tool to fix airline finances. It delivers profit-boosting results during times of severe economic distress, and works effectively to lift profits even higher when airlines are achieving investment-grade margins," the report says.


"But airlines should tread carefully. A la carte pricing works best when consumers are truly free to choose the product that best meets their needs."


"It's reasonable to suggest ancillary revenue will someday exceed the airline industry's annual fuel bill," it said.


 

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