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Airlines begin planning for the next generation of profit-driving fees

Nov 06, 2012 12:36 am

Skift Take

Airlines will likely fish for a fresh source of revenue as fees have proved a successful buffer to economic hardship that arose from high fuel costs and a drop in passenger numbers.

— Samantha Shankman

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The amount airlines are pocketing on passenger fees continues to rise, prompting the question: What new fees can carriers think up?

The world’s biggest airlines are expected to collect $36.1 billion in passenger fees in 2012, including charges to check bags, buy food and drinks, and use onboard wireless Internet, according to a study released last week by IdeaWorksCompany, a Wisconsin consultant on airline revenues, and Amadeus, a travel technology firm in Madrid.

The latest total represents an 11.3 percent increase from the $32.5-billion estimate for 2011, according to the study.

One reason for the increase, the author of the report said, is that airlines and online travel agents have made it easier to pay for such extra charges at the time you book your flight on the Web, instead of waiting until you get to the airport or to your seat to pay.

The travel website Orbitz, for example, offers a deal that lets you pay an extra $50 when you book your flight online, entitling you to check two bags at no extra charge and sit in a roomier seat near the front of the plane.

“They are understanding how to raise and lower fees to maximize overall revenue and how to better position items in the booking path to drive better sales,” said Jay Sorensen, president of IdeaWorksCompany.

What new fees can you expect in the future?

Joe Brancatelli, who writes a weekly travel column for the business travel website JoeSentMe, said airline executives must get creative because they already have adopted charges for almost every extra service offered.

“The low-hanging fruit is gone,” Brancatelli said. “They are going to have to invent products.”

Among other charges airlines will push harder to get you to pay for, he predicts, are extras such as luggage delivery services, travel insurance in case you need to rebook a flight, higher fees for faster onboard Wi-Fi, and hotel and car rental package deals.

“Airlines are looking for anything they can do to raise revenue,” Brancatelli said.

(c)2012 Los Angeles Times. Distributed by MCT Information Services.

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