Airlines make $27 billion in fees, programs
Updated On: Jun 06 2013 09:59:57 AM CDT
The airlines are making billions by selling much more than a simple coach seat.
United Airlines collected more than $5.3 billion in ancillary revenue last year, more than any other airline analyzed in a new report.
The airlines collected $27.1 billion in baggage fees; head-of-the-line boarding rights; hotel and car rental commissions; and other ancillary revenue programs in 2012, according to the IdeaWorksCompany's CarTrawler Review of Ancillary Revenue Results for 2012, released Wednesday.
That's more than double the $13.5 billion collected by 47 airlines in 2009. (The 2012 report included the 53 airlines worldwide that disclose ancillary fees.)
Ancillary fees include an airline's a-la-carte features, frequent flier programs and commission based programs.
For the low-cost carriers like Spirit Airlines and Allegiant, these fees are a high percentage of their total revenue. Spirit Airlines ranked first with the highest percentage of revenue from fees -- 38.5% of its total revenue in 2012. Allegiant came in second place with 29.9% of revenue from fees and Jet2.com came in third place with 26.5%.
"Statistics help tell the ancillary revenue story, and every year key numbers are getting larger," says Jay Sorensen, president of IdeaWorksCompany, in a statement. "The most aggressive airlines easily have more than 20% of their revenue produced by a la carte fees. The best performers realize more than $30 per passenger from ancillary revenue.
"This can be almost totally generated through optional extras as with Spirit and AirAsia X, or largely achieved through the co-branded credit cards held by consumers at Qantas and Virgin Atlantic. Whatever the source, it is revenue desperately needed by airlines during troubled economic times."
Delta Air Lines came in second place in total ancillary revenue with $2.58 billion, followed by American Airlines ($1.99 billion), Southwest Airlines ($1.66 billion) and Qantas Airways ($1.57 billion).
Rounding out the top 10 were Ryanair ($1.39 billion), Air France/KLM ($1.20 billion), easyJet ($1.1 billion); USAirways ($1.07 billion) and Korean Air ($722 million). (IdeaWorks didn't receive last year's easyJet results so used 2011 results and other data to generate last year's estimates.)
Qantas Airways did the best job of making money off of each customer, collecting $56.21 per passenger, followed by Spirit's $48.72 per passenger.
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