We all know that airlines have decided to climb their way to profitability via ticky-tack charges like baggage fees and extra legroom seats, but did you know just how much the airlines are profiting from this business model? It’s unbelievable.
According to a study by IdeaWorksCompany (sponsored by CarTrawler), the airlines raised $2.45 billion in ancillary revenue in 2007. Seven years later, the numbers are staggering. Want to throw out a guess? $10 billion? $15 billion? Still way too low. In 2014, the airline industry brought in $38.1 BILLION DOLLARS. In seven short years, they were able to squeeze an additional $35+ billion dollars out of us. That’s greater than the GDP of a lot of countries!
Americans may not be too surprised to discover that US airlines lead the charge in ancillary fees. After all, we’ve gotten used to paying for every little thing from headphones to early boarding privileges. The number one airline making extra revenue is United Airlines with over $5 billion. The American/US Airways behemoth places second (after they merged) and Delta takes the third spot.
Now, it’s important to note that the ancillary revenue isn’t just baggage fees. It also includes money raised selling points and miles to credit card companies who then offer them to us to entice us to sign up for their co-branded credit cards. That said, a ton of money comes directly from the travelers who are expected to fork out well more than the ticket price for a flight these days. The average extra cost per flyer is $17.49 but some airlines like Spirit and Allegiant are making close to $50 per passenger per flight.
Check out the full report here and see how the airlines are laughing all the way to the bank on a source of revenue that barely existed industry-wide a decade ago.