The airline industry is profitable again — really profitable — and here’s one reason why

By | July 21st, 2010

In a word: fees. Lots and lots of fees.

Alright, it isn’t just the baggage surcharges and change fees. Airlines have cut capacity and raised fares, and business travelers are coming back after a long absence. But with United Airlines posting its first profit in three years and Delta recording its best quarter ever, you’ve gotta wonder — how much do fees and surcharges have to do with it?

We have an answer, thanks to Amadeus and IdeaWorks. Disclosed ancillary revenue activity from the world’s airlines jumped 43 percent to $13.5 billion in 2009, compared to a year before, they reported.

The ranking reveals United, America, Delta, Qantas, and Ryanair as top overall ancillary revenue producers for 2009.

For 2009, United has taken the lead in finding so-called “ancillary” revenues. US Airways and Alaska Airlines have joined the list.

As a percentage of revenue, however, two smaller American carriers — Allegiant and Spirit — take the top spot. Something to remember the next time you see a “bargain” fare on one of those airlines.

Another carrier to watch: Alaska Airlines, which is getting more than 13 percent of its revenues from fees.

On a per-passenger basis, Allegiant again socks it to passengers, racking in more than $30 per passenger. Spirit holds its own, while United and American pull in some impressive numbers.

And hey, look who made the per-passenger list for 2009? That’s right, Alaska.

Watch that airline.

I’m deeply troubled by these numbers. There’s no doubt that ancillary pricing is forcing passengers to spend more for their tickets than they normally would — almost certainly more than they intended to when they first booked the ticket.

Related story:   Incidentally, where's my $10?

The airline industry insists that a la carte pricing gives its customers choices. Indeed. The only choice we’re really being offered is: American Express, MasterCard or Visa.

The sooner this nonsense is regulated by the government, the better it will be for all of us.

(Photo: Gisela Giardino/Flickr Creative Commons)

  • JlhPsi55

    The airline industry is a government supported oligopoly that effectively  killed competition and raised fares substantially over the past five years.  The choice given the traveling public is “high” higher” and “highest of all”. If there was real competition, baggage fees would have disappeared after the price of jet fuel dropped in 2009.

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