The air visitor currently may discover they are feeling nickeled and dimed by all the little “extra” charges. But for the airline market, they’re gold. According to a new report, they add up to hundreds of millions.
What the new study equals
The market was able to make $21.46 billion just last year from luggage expenses, frequent-flier programs, co-branded charge cards and similar non-transportation charges, states the Amadeus Review of Ancillary Revenue Results.
Top dollar earners
About $5 billion was brought in in extras with United Continental Airlines, which was the most non-transportation money an airline brought in. Second was Delta, at $3.7 billion. American Airlines, at $2 billion, was the 3rd largest earner. All of these are United States based corporations.
Low-budget means extras are high percentage of revenue
More money is spent on additional fees for income at bargain airline carriers due to lower ticket costs. If the data is analyzed as a percentage of total income, they do the best. Allegiant Airlines (29.2 percent), Spirit Airlines (22.6 percent), and Ireland-based Ryanair (22.1 percent) were the three big earners.
Increase in charges to be expected
Jay Sorenson is president of IdeaWorks and co-author of the study. He believes that every person should watch out for even more non-transportation expenses. “Oil prices spiked in 2008, which was also the year in which the U.S. industry introduced baggage fees. We’re nearing those historical oil prices again, and I believe we’re going to see another round of new à la carte fees.”
Study done previously
Another study was done earlier this year by the Washington D.C.-based lobby group Consumer Travel Alliance. The study was done with a coalition of travel agencies with Open Airlines for Airfare Transparency. Last year, passengers who flew paid an average, for a round trip flight, in charges of about $36.80. The study was very accurate.
Getting the government involves
The two groups have collected, as of last March, more than 60,000 online signatures in an attempt to urge the federal government to force airline carriers to make their expenses more transparent.
Articles cited
MSNBC
overheadbin.msnbc.msn.com/_news/2011/06/01/6764501-nickeled-and-dimed-for-21-billion
Denver Business Journal
bizjournals.com/denver/news/2011/03/10/airlines-cost-coloradans-1486m-in.html?ana=RSS&s=article_search
Business Week
businessweek.com/ap/financialnews/D9IBOU7G6.htm
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