Airline ancillary fees are big business


According to statistics from the US Department of Transportation’s Bureau of Transportation Statistics (BTS), the airline industry collected at least US$1.9 billion through ancillary fees in the fourth quarter of 2009. Again, that’s for one quarter, so we are talking about nearly US$8 billion a year just in revenue from fees.

And this does not include revenue from seating assignments and on-board sales of food, drink, pillows, blankets, entertainment, or any other ancillary items. Those fees are reported in a different category called Transport Related Revenue, which supposedly cannot be identified separately. The fees that are included in the statistics are baggage fees, reservation change fees, and miscellaneous operating revenue, including pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees.

For the year, the carriers collected $7.8 billion in ancillary fee revenue, compared to $5.5 billion in 2008. This figure is up 18.3 percent from the fourth quarter of 2008. The ancillary fees constituted 6.5 percent of the total revenue of the 32 carriers that reported receiving ancillary fees.

The top three carriers in terms of ancillary fee in 2009 were as follows:

1.Delta – US$1648 million
2.American – US$1002 million
3.US Airways – US$912 millin

From October to December, the airlines collected US$736 million in baggage fees, US$564 million from reservation change fees, and US$611 million from other ancillary fees, such as pet transportation fees and frequent flyer award program mileage sales.

Delta Air Lines collected US$425.7 million in the fourth quarter ancillary fees, the most of any carrier. For Delta, its fourth quarter ancillary fees has grown by 47.3 percent over the same period in 2008.

The department also shared that 21 percent of Spirit Airlines’ operating revenue came from ancillary fees, a larger percent than any other carrier.

In 2009, the airlines collected US$2.7 billion in baggage fees, US$2.4 billion from reservation change fees, and US$2.7 billion from other ancillary fees.

Delta collected US$1,647.6 million in annual ancillary fees, the most of any carrier.