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Nothing makes passengers feel like they are being nickel-and-dimed more than airline fees. Do you want to pick your seat? That’s going to cost you. Do you want to take clothes with you too? That’s going to cost you. Do you need to change to a later flight? That’s not going to only cost a change fee but will also require the difference in ticket price (and yes, the ticket has increased in price).
BACKGROUND
In 2008, the airline industry was struggling so airlines executives began charging customers $15 for their checked bags. In 2010, US airlines generated $2.3 billion in baggage fees total. Unfortunately, over the years, bag fees have become the norm, have steadily increased in price, and become a major line item on balance sheets.
HOW MUCH OF A LINE ITEM?
Yesterday, the US federal Bureau of Transportation Statistics announced that airlines made approximately, $8.6 billion in fees in 2019, including $5.8 billion on baggage fees and $2.8 billion in ticket change and cancellation fees.
Interestingly, airlines made nearly a billion dollars more than in 2018 because of fee increases and strong travel demand.
WHICH AIRLINES TOOK IN THE MOST?
I don’t this will be shocking but the ‘Big US3’ took in more than $1 billion each from bag fees in 2019.
- American Airlines generated: $1.34 billion
- Delta Air Lines generated: $1.04 billion
- United generated: $1 billion
FINAL STAMP
As I’ve said in many articles before, the airlines are between a rock and a hard place during this pandemic. At the moment, there are virtually no bags to check and most airlines are waiving ticket changes which contribute to the staggering numbers of how much airlines are losing daily.
Q1 2020 numbers have not been released but won’t show the effect the pandemic has had on the industry because the pandemic did not start to hit the airlines with much impact until the beginning of March.
But I can assure you that with roughly 5% of the passengers flying today compared to last year, the revenue numbers will be a fraction of 2019.
I predict that airlines will need to find a delicate balance between their need for revenue and passengers “need” to fly when this crisis passes as many airlines may have to change their model to stand out and win passengers back.
What do you think about the numbers? Are they surprising?
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