Airlines Made $38 Billion From Extra Fees And It's Only The Beginning

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You may be familiar with this meme: “If a 747 can carry the space shuttle, then I call bullshit on overweight luggage fees.” Airlines collected $38.1 billion in revenue from such fees in 2014, almost a 21 percent increase year-over-year. These fees are the new normal, and future fees are a pure insult to your intelligence.

A new report from IdeaWorksCompany and CarTrawler shows that the three major U.S. air carriers are the leaders of this trend towards collecting more and more non-fare revenue from passengers. United, American/U.S, Airways and Delta constitute the top non-fare revenue earning airlines, with over $13.6 billion collected between them in the last fiscal year. Michael Cunningham, Chief Executive Officer at CarTrawler, notes, “The question is not who is doing it, but how well it is being done.”

Airline revenue from ancillary services has never been higher. In 2007, airlines collected $2.45 billion in non-fare receipts. The types of fees airlines now assess (oversized baggage fees, overweight baggage fees, “last minute” ticketing fees, priority boarding fees, redeposit frequent flier miles fees, etc.) has grown steadily and will only continue to grow in the future.


In addition to being notoriously bad at making money, the airline industry certainly isn’t simple. It faces all kinds of pressure that include fluctuating oil prices, organized labor and environmental factors entirely outside of their control.

The ways that airlines are actually managing to turn a profit are changing dramatically. Airlines used to be in the business of transporting a person from a departure gate to an arrival gate. They are still in that business, but now they’re also in the business of selling ancillary add-on services. Basically, airlines are trying to turn you upside down and shake you until all of your money comes out.

Following the model of some low-cost European Airlines, U.S. airlines are already looking for the next big opportunity to charge you more money, and in-flight entertainment is the next frontier for ancillary fees. U.S. carriers will increasingly offer in-flight WiFi at a set price, but to be able to check e-mail, or watch a movie or perform any number of other basic, routine online tasks would each cost individual fees. This is not in the best interest of the consumer, who were kind enough to bail out these very same airlines from the point of bankruptcy in the very recent past.


Airlines are able to offer passengers a marketplace of services while in flight, but that doesn’t mean they should insult their paying customers with such bogus a la carte items. This also sets a dangerous example for other industries, such as hotels, who could look at the airline industry as justification for further itemizing services (often hidden) in an attempt to gouge travelers.


Moreover, the quality of these ancillary services are hardly worth what they cost. Noted travel guru Ben Schlappig recently reported that he paid $41 for in-flight WiFi from Frankfurt to JFK and was only able to “send out a couple of Tweets and read a couple of emails.” Assuming he was able to send a total of five e-mails and five tweets, that’s over $4 per message. To think that these fees could come in addition to a basic WiFi access fee is just preposterous.

Imagine a future in which using the lavatory on an airliner is free, but flushing the toilet costs $5.00. Or the bag of extra-salty pretzels you receive as part of the in-flight snack are complimentary, but a napkin to wipe off your fingers costs $2.50.


The friendly skies now resembles a back-alley shakedown, and some bean-counter is to blame for totally ruining the passenger experience.


Photo credit: Top shot - Jeff Roberson/AP, Meme - Public domain, Passengers pulling luggage - Marlene Awaad/Bloomberg via Getty Images, Check-in kiosks - Tim Boyle/Bloomberg via Getty Images, Passengers in United ticketing queue - Joe Raedle/Getty Images

Follow the author on Twitter: @collinkrum