Stupid, Infuriating Airline Fees Are Wildly Profitable

Illustration for article titled Stupid, Infuriating Airline Fees Are Wildly Profitable

Not only do planes increasingly resemble tin cans full of fire ants, but airlines are increasingly charging extra cash for every little "amenity," from extra legroom to checking your bag instead of doing battle with a salesman from Tampa for the last few precious inches of overhead bin space.

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Unfortunately, they aren't going anywhere because the airlines are making goddamn bank on "ancillary fees," which encompasses everything from upgrading to switching flights. (Have you ever tried rebooking a missed flight over the phone? You're much better off throwing yourself on the mercy of an IRL employee at the airport.) That's according to Business Insider. If anything it'll likely get worse:

In 2010, airlines around the world made $22.6 billion in ancillary revenue, worth 4.2% of industry revenue, according to an October 2013 report by IdeaWorks. In 2013, that number will reach $42.6 billion, worth 6% of total revenue.

About half of that comes from commissions for hotel bookings and sale of frequent flier miles. The rest is from "a la carte fees," like the $100 fee Spirit and Frontier charge some passengers for the right to have a carry-on bag.

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U.S. airlines made $899.5 million in checked baggage fees alone, according to CNBC. Meanwhile, Air Canada, for instance, will begin actually policing the size of passengers' carry-ons, to make sure they get that $25 fee if they're eligible. Oh, and Spirit just announced they'll jack their checked-bag fee up an additional $2 for the holidays. HAPPY HOLIDAYS!!!

If you need me I'll be crying tears of helpless frustration into my $15 airport beer.

Photo via AP Images.

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DISCUSSION

arischwartz
Ari Schwartz: Dark Lord of the Snark

Bag fees are just airlines making up for consumers chasing cheap airfares, plain and simple.

Airlines aren't typically profitable on the margins anyway. Sites like Kayak have forced prices down to a point that margins have all but vanished, and much less stable fuel prices mean that airlines have a harder time hedging their fuel costs.

You get what you pay for, and if you want rock bottom ticket prices, you'll get charged on bags and other little nitpicky things. Looking at gross revenues and declaring "profit" is not accurate: if costs outstrip revenue, then you're still not profitable.

Before anyone accuses me of being full of shit on profit margins: http://www.iata.org/pressroom/pr/P…

I've seen as high as a few percent, but generally speaking airlines are not particularly great to be in. I'd rather own a railroad than an airline. And people still want business class amenities on a rock bottom ticket.

Buy cheap get cheap. Fly the crappy skies.