The latest number for profit earned from ancillary fees, those pesky a la carte fees like extra bags, early boarding, premium security access and many more, are out for 2012 and it shows that the airlines are making it big on these fees. The numbers show that airlines added $27 billion in profit from extra fees during 2012. Many of the low cost carriers led the way with the highest percentage of revenue from these fees. Airlines like Spirit earn a good chunk of their revenue outside of just the ticket price and in 2012 they earned an average of $48.72 per passenger and 38.5 percent of their total revenue just on the extra fees.
To me this just means that ancillary fees are here to stay. The profit that can be earned that involves little extra work on the airlines part, such as earning money for a bag they would most likely be carrying anyways or adding a few extra people to the early boarding groups is straight money into their pockets. Though some consumers may stop paying for these conveniences, there are always consumers that are willing to pay the little extras for the service. As we move forward over the next few years I expect we will see the return of many programs like United's subscription programs for baggage or extra room seating options. Infrequent flyers who are willing to pay for the extra perks, but may not realize the benefits they could receive from flying up to elite qualification levels, will be the target here and many of them will buy in. So...don't expect that extra bag charge or less people in the premium security lines soon. As long as someone is willing to pay...the airlines will gladly take their money.
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Airline makes money because we allow them.
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ReplyDeleteGuess what? This is exactly what major companies are paying for. They need to know what their average customer needs and wants. So these companies pay $1,000,000's of dollars per month to the average person. In return, the average person, myself included, answers some questions and gives them their opinion.