Go Back  FlyerTalk Forums > Travel&Dining > TravelBuzz
Reload this Page >

Airlines Make Billions From Extra Fees

Airlines Make Billions From Extra Fees

Old Aug 12, 12, 12:32 am
  #1  
Original Poster
 
Join Date: Jan 2011
Posts: 484
Airlines Make Billions From Extra Fees

Here is why all of those extra fees are here to stay and probably more to come:

http://travel.sympatico.ca/hot_topic...mExtraFees.htm

"Airlines make record $22.6 billion from extra fees by Jelena Djurkic
Airlines are finding creative news ways to squeeze money from travelers and generating big bucks. Airlines are raking in big bucks from your extra baggage—$22.6 billion to be exact.

***

The top ten airlines who made big ancillary revenue in 2011 were:

•United Continental ($5.2 billion)
•Delta ($2.5 billion)
•American ($2.1 billion)
•Qantas ($1.4 billion)
•Southwest ($1.2 billion)
•easyJet ($1.1 billion)
•Ryanair ($1.1 billion)
•US Airways ($1.1 billion)
•TAM ($667 million)
•Alaska ($610 million)"

Last edited by Ocn Vw 1K; Aug 12, 12 at 12:59 am Reason: To comply with FT Rules barring quote of full text of copyrighted material.
znke252 is offline  
Old Aug 12, 12, 2:08 am
  #2  
 
Join Date: Jan 2010
Location: Alberta, Canada
Posts: 194
Not really surprising, less service, higher prices. And we dont really have any options until one airline really bucks the trend and finds success doing it.
magsmeplease is offline  
Old Aug 12, 12, 8:14 am
  #3  
 
Join Date: Apr 2007
Programs: AA, DAL, blah, blah, blah...The usual.
Posts: 646
Good for them.
If they don't make money, this forum's days are numbered.

It's a la carte pricing. You get what you pay for.
If you think your "bags fly free" on Southwest, you're mistaken.
The difference is, you are paying for checked bags on Southwest, whether or not you check a bag. It's all averaged out and included in the price of the ticket.

Don't blame the airlines. Blame the travel websites (Orbitz, Travelocity etc). People voted with their wallets; the airlines are giving people exactly what they wanted (or deserved). This is precisely why you won't find Southwest's tickets for sale on any of those websites. When sorted by price, they Southwest won't be anywhere near the top on most routings.
airmotive is offline  
Old Aug 12, 12, 8:31 am
  #4  
Suspended
 
Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,268
Speaking as someone who learned to pack and doesn't generally check bags, I'm thrilled that carriers charge those that do for all of the extra costs, rather than building those costs into my ticket prices.

Where the system has gone off the rails is with freebies for some. It's one thing to bump up someone spending $40K+ on your airline, another to take someone who may fly alot, but spends little just to fill a seat up front.
Often1 is offline  
Old Aug 12, 12, 9:45 am
  #5  
 
Join Date: Aug 2012
Posts: 129
Originally Posted by Often1 View Post
Where the system has gone off the rails is with freebies for some. It's one thing to bump up someone spending $40K+ on your airline, another to take someone who may fly alot, but spends little just to fill a seat up front.
Wait, are you saying that the airlines shouldn't fill an otherwise empty seat simply because the people they're bumping up can't afford the seat?

I eagerly await the days where they get rid of first/business class completely in favor of making it an "equal" flying experience for everyone. That way people can't complain when they don't get bumped to a better class.

That said, airlines are like utilities when it comes to increasing rates, providing an inferior product, and maintaining their status in the industry by claiming their "costs" are going up while they nickle and dime the customer into the ground.

Having an effective "monopoly" on air travel means they don't have to actually compete, hence why a lot of fares are the same regardless of where you're going, hence the lack of innovation or actual customer service.

I can't wait for them to throw an Air surcharge onto the taxes and fees, after all piping in the safe to breath air costs them money, which is factored into the price of the airline ticket, but at the end of the day why not charge the customer twice?

Do you guys really think the airlines will institute additional "add-ons" and will actually lower the base fares? They're looking for supplemental revenue streams, not replacement revenue streams.
serioustraveler is offline  
Old Aug 12, 12, 10:16 am
  #6  
Suspended
 
Join Date: Jan 2002
Posts: 22,778
Wirelessly posted (Samsung Galaxy S: Mozilla/5.0 (Linux; U; Android 2.3.6; en-us; SGH-T959V Build/GINGERBREAD) AppleWebKit/533.1 (KHTML, like Gecko) Version/4.0 Mobile Safari/533.1)

Originally Posted by Often1
Speaking as someone who learned to pack and doesn't generally check bags, I'm thrilled that carriers charge those that do for all of the extra costs, rather than building those costs into my ticket prices.

Where the system has gone off the rails is with freebies for some. It's one thing to bump up someone spending $40K+ on your airline, another to take someone who may fly alot, but spends little just to fill a seat up front.
I travel with very little even though I am allowed as many as three bags free-- reminds me of bah bah black sheep.
Before airlnes started charging fees for checked luggage, I felt I should get a discount for not using my free allowance. I also do not travel with oversized carry-ons.
Whether airlines should have a programme of benefits, or "freebies", as you call them, is a different issue altogether. There just aren't enough people out there willing to spend $40k a year. For some one who spends a lot more, $40k could be peanuts, and $40k spenders kettle.
So far airlnes do not consider elite benefits burdensome. It could change.
Yaatri is offline  
Old Aug 12, 12, 10:21 am
  #7  
In Memoriam
 
Join Date: Feb 2000
Location: Easton, CT, USA
Programs: ua prem exec, Former hilton diamond
Posts: 31,801
Stories like this always make me laugh.

The report, released by consulting firm IdeaWorks, found ancillary fees have gone up 66 per cent from $13.5 billion generated in 2009. In the case of United, the extra revenue amounts to $36.47 per passenger in fees.

Really, they had to get a consulting firm for this? The fees are reported on the monthly government reports available for free to everybody. They really couldn't get somebody to go through the last few years of reports and put the numbers into a worksheet?

Maybe the headline should be consulting firms bring in millions from people too lazy to add up a couple numbers.
cordelli is offline  
Old Aug 12, 12, 10:24 am
  #8  
 
Join Date: Apr 2007
Programs: AA, DAL, blah, blah, blah...The usual.
Posts: 646
Originally Posted by serioustraveler View Post
Wait, are you saying that the airlines shouldn't fill an otherwise empty seat simply because the people they're bumping up can't afford the seat?

I eagerly await the days where they get rid of first/business class completely in favor of making it an "equal" flying experience for everyone. That way people can't complain when they don't get bumped to a better class.

That said, airlines are like utilities when it comes to increasing rates, providing an inferior product, and maintaining their status in the industry by claiming their "costs" are going up while they nickle and dime the customer into the ground.

Having an effective "monopoly" on air travel means they don't have to actually compete, hence why a lot of fares are the same regardless of where you're going, hence the lack of innovation or actual customer service.

I can't wait for them to throw an Air surcharge onto the taxes and fees, after all piping in the safe to breath air costs them money, which is factored into the price of the airline ticket, but at the end of the day why not charge the customer twice?

Do you guys really think the airlines will institute additional "add-ons" and will actually lower the base fares? They're looking for supplemental revenue streams, not replacement revenue streams.
Airlines have a monopoly? I can rattle off ten major airlines in the US alone. With a little effort, I could probably come up with another twenty small independent airlines. It's one of the - if not THE - most competitive industries in the world. They're not anything like utilities. I would argue they are the polar opposite of utilities, with the only similarity being they're both beholden to the price of fuel.

Air travel has never been more affordable. Perhaps you missed out on the pre-deregulation days of air travel. It's worth stating again: Air travel has never been more affordable. Do the math. It's the truth.

Don't like multi-class airplanes, fly single-class airlines. There's several to choose from. You don't get choices like that in a business monopoly.

Want to be treated like royalty? Pay for it. That doesn't just apply to air travel; it applies to pretty much everything in life.
Don't mind being treated like a penny pincher as long as you can travel a thousand miles in three hours? That option is also there. A thousand options in between are also available.

You don't go the McDonalds and complain because filet mignon isn't on the dollar menu (or perhaps you do, I dunno). But for some reason, people do just that when it comes to air travel.

People get the government they deserve.
They also get the airline industry they deserve.
If an airline (ANY airline) thought they could stay in business by providing 100% first class product at fares low enough for people to afford, it would be done. In fact, it has been attempted several times...and all failed rather quickly. Not enough people are willing to pay that kind of money when Orbitz can get them to the same airport in the same amount of time for 1/10 the cost, albeit in tight quarters.
airmotive is offline  
Old Aug 12, 12, 10:38 am
  #9  
 
Join Date: Apr 2012
Programs: United 1K, Marriott Platinum
Posts: 835
Originally Posted by cordelli View Post
...They really couldn't get somebody to go through the last few years of reports and put the numbers into a worksheet?
Yes, they got IdeaWorks to do it.
KurtVH is offline  
Old Aug 12, 12, 11:46 am
  #10  
 
Join Date: Aug 2012
Posts: 129
Originally Posted by airmotive View Post
Airlines have a monopoly? I can rattle off ten major airlines in the US alone. With a little effort, I could probably come up with another twenty small independent airlines. It's one of the - if not THE - most competitive industries in the world.
20-30 businesses does not constitute competition when you're talking on a global scale. I'm sorry, but the airline industry IS pretty much an effective monopoly with less than 100 big players and in some cases 1-2 choices for a given route.

It may be one of the most "competitive" industries in the world but that doesn't mean much if the rest of the industries are also effective monopolies.

For some reason you seem fixated on the idea that I think only the rich should fly, the reality is that they're adding more and more fees and bogus charges in order to make it so that eventually only the rich will be able to fly.

I'm all for a business being able to charge whatever they want for a product, but at the same time we have the right to call bs when they start implementing fees such as letting you use the bathroom or checking luggage that was previously part of your fare.

Accounting for fuel cost increases, inflation, and difficulties in the market is one thing, tacking on fees left and right to pocket a ton of cash is another thing.

Again, Do you guys really think the airlines will institute additional "add-ons" and will actually lower the base fares? They're looking for supplemental revenue streams, not replacement revenue streams.

Yes, they got IdeaWorks to do it.
Pretty much this, the idea that it's somehow simple to dig through piles of data to create a report and that it shouldn't cost "millions" to do a report ignores how complex digging through the data is. Consulting firms exist for a reason, if they could sift through the data cheaper they would.

Edited for additional reading:
http://talkingunion.wordpress.com/20...-of-the-skies/

When Congress deregulated airlines in 1978, the central premise was to expand competition, to offer consumers more choices and to lower prices. On all accounts, these have been exposed as complete myths and distortions. Today, thirty years after the deregulation of airlines, there is a virtual monopoly in the skies and steadily increasing fares.

Last edited by serioustraveler; Aug 12, 12 at 11:52 am
serioustraveler is offline  
Old Aug 12, 12, 12:10 pm
  #11  
 
Join Date: Apr 2007
Programs: AA, DAL, blah, blah, blah...The usual.
Posts: 646
Ahhh yes. A socialist blog's opinion on an industry.
"Fact check, aisle one!"

If you want to talk "global scale", now you're talking hundreds of airlines, not 20 or 30.

Look, I get it. You're a socialist. I'm a capitalist. We're going to have a fundimental differences of opinion when it comes to industry.

I don't think that you think only the rich should fly.
Rather, I think that you think that everyone should be treated equally, regardless of what they pay. Or, more accurately, that no one should be allowed to pay more for a better product.
That's socialism at its purist...and also its downfall, because it flies in the face of human nature.
Fortunately, we live in a 'moderately' free society. You are free to start up an airline and run it into the ground.
airmotive is offline  
Old Aug 12, 12, 12:30 pm
  #12  
 
Join Date: Aug 2012
Posts: 129
Originally Posted by airmotive View Post
Ahhh yes. A socialist blog's opinion on an industry.
"Fact check, aisle one!"

If you want to talk "global scale", now you're talking hundreds of airlines, not 20 or 30.

Look, I get it. You're a socialist. I'm a capitalist. We're going to have a fundimental differences of opinion when it comes to industry.
Your assumptions about me couldn't be further from the truth.

You're also refuting my links by calling them a socialist blog instead of actually presenting evidence to the contrary.

Look, I get it. You're not actually interested in the truth and are only interested in arguing and making assumptions.

It's alright, we're going to have differences of opinion when it comes to the airline industries gouging their customers. Thankfully the facts are on my side and you can go enjoy getting nickle and dimed while receiving less for your money.
serioustraveler is offline  
Old Aug 12, 12, 1:32 pm
  #13  
 
Join Date: Apr 2012
Programs: United 1K, Marriott Platinum
Posts: 835
Originally Posted by serioustraveler View Post

... the reality is that they're adding more and more fees and bogus charges in order to make it so that eventually only the rich will be able to fly.

kvh: Except that airfares in constant dollars are down about 40% since deregulation.


Accounting for fuel cost increases, inflation, and difficulties in the market is one thing, tacking on fees left and right to pocket a ton of cash is another thing.

kvh: That's business. Besides, I can't begin to know all the information necessary to make the pricing and fee decisions an individual airline has to make never mind all the airlines in this country. Even those who are paid to make those decisions often get it wrong even with a relatively free market giving them feedback. I can guarantee a modern day CAB would do worse; at least from the consumer's standpoint.

Again, Do you guys really think the airlines will institute additional "add-ons" and will actually lower the base fares? They're looking for supplemental revenue streams, not replacement revenue streams.

kvh: Again, even with the additional fees, flying is getting cheaper, not more expensive.
KurtVH is offline  
Old Aug 12, 12, 1:56 pm
  #14  
Suspended
 
Join Date: Jan 2002
Posts: 22,778
Wirelessly posted (Samsung Galaxy S: Mozilla/5.0 (Linux; U; Android 2.3.6; en-us; SGH-T959V Build/GINGERBREAD) AppleWebKit/533.1 (KHTML, like Gecko) Version/4.0 Mobile Safari/533.1)

Originally Posted by KurtVH
Originally Posted by cordelli View Post
...They really couldn't get somebody to go through the last few years of reports and put the numbers into a worksheet?
Yes, they got IdeaWorks to do it.
That's what consulting firms do. Same goes for much of "research" also-compilation of existing data, a few simple calculations, wirh some bar graphs amd pie charts thrown it to support a conclusion, not necessary thr most compelling one. That's why people don't trust statistics.
This is quite unlike reasearch in sicences and engineerng, which leads to development of new ideas and products, sometimes a whole new industry -- transistors to IC's, CPU's,GPU's and all kinds of specialised procesors, as well as varios types of memory and SSD. The list is endless.
Yaatri is offline  
Old Aug 12, 12, 1:58 pm
  #15  
 
Join Date: Aug 2012
Posts: 129
Originally Posted by KurtVH View Post
Except that airfares in constant dollars are down about 40% since deregulation.

Again, even with the additional fees, flying is getting cheaper, not more expensive.
Citation needed.
http://www.thisismoney.co.uk/money/h...rice-test.html

The Ala cart option is actually more expensive than having a fixed price at the end of the day.

Flying has gotten a LOT more expensive. Think airlines will lower prices when they save money?
http://www.farecompare.com/news/flig...ummer-airfare/

This doesnt mean airlines would give shoppers a big price break if oil prices suddenly plunged you may recall that during last summers ticket tax holiday, most carriers pocketed the government tax savings anticipated by consumers with a strategically-timed price hike.
http://www.mid-day.com/news/2012/jun...rice-falls.htm
serioustraveler is offline  

Thread Tools
Search this Thread