Wednesday, May 27, 2015

Airline fees: How the tail is wagging the dog

Airline fees are in the news again this week, with U.S. DOT issuing a quarterly report on the revenue the larger carriers took in from charging for bags, changing tickets and a few other sources. The figures -- and the totals are north of $3 billion just from those two categories in the first nine months of the year -- show clearly that fee revenue is as important as ticket revenue for the airlines that depend on them. How fortunate airlines are: With just a few exceptions they all tend to mimic each other, so one is not at a terrible competitive disadvantage compared with the others as they adopted various fees, and they have found a way to supplement ticket sales at the same time.

Airline fees: How the tail is wagging the dog

Airline fees are in the news again this week, with U.S. DOT issuing a quarterly report on the revenue the larger carriers took in from charging for bags, changing tickets and a few other sources. The figures -- and the totals are north of $3 billion just from those two categories in the first nine months of the year -- show clearly that fee revenue is as important as ticket revenue for the airlines that depend on them. How fortunate airlines are: With just a few exceptions they all tend to mimic each other, so one is not at a terrible competitive disadvantage compared with the others as they adopted various fees, and they have found a way to supplement ticket sales at the same time.

As most travelers know, this doesn't apply to Southwest because it doesn't charge for checked bags or making ticket changes. Besides those categories, all the airlines also have found a variety of other things to attach fees to, as this article from Farecompare.com's Rick Seaney points out.

About this blog
Tom Belden has been reporting about Philadelphia International Airport and other air travel subjects for more than 20 years, writing columns for The Inquirer's Travel and Business sections. His reporting (with colleague Craig McCoy) on baggage handling problems in Philadelphia have been credited with helping to improve the system. His previous blog was called Road Warrior. He can reached at tbelden@phillynews.com. Reach Tom at tbelden@phillynews.com.

Tom Belden