As a blogger, and in my role of weekly columnist for ABCNews.com, I get a lot of questions and comments about airline fees — ranging from the financial impact to passenger exasperation, and what’s coming next. Here are some of the most common concerns I hear:
- Are airline fees here to stay?
- What is the next bombshell airline fee?
- How much revenue is generated by airline fees?
- Do passengers really care if some airlines have cheaper fees than others?
In this guide, I will attempt to address all these concerns and more; I’ve talked to many of the players involved in this food chain of fees, from airline execs to passengers, and I think I can provide some insight into this complicated new world and, provide some practical advice.
Does Anyone Like Airline Fees?
I dare say you would be hard pressed to find anyone who would admit to “liking” fees of any sort — least of all the panoply of fees the airlines are currently charging! It’s a bit like asking someone if they like waiting in line at the DMV.
So it’s unanimous among the passengers: every single one of them has told me they wish the airlines would quit nickel and dime-ing them, by just rolling the airline fees into the ticket price and being done with it.
Oddly enough, passengers and airlines agree (sort of)?
Airlines would like nothing more, because then they wouldn’t need expensive new IT systems to charge and account for those fees, plus there would be no issues of seamless distribution across multiple distribution channels, no having to teach tens of thousands of employees how to properly distribute and police them, no competitors beating them over the head because they don’t have certain fees or theirs are cheaper, no issues with transparency and disclosure to passengers, and no congressman and senators threatening to review and regulate them.
Whew. You see, fees are just as much a pain for airlines as they are for passengers.
Alas, airline fees are here to stay for one simple reason:
When airlines raise ticket prices — passengers quit buying — it’s that simple.
This is especially true in the past couple of years, because of the demand-killing recession, which was preceded by runaway fuel prices. Even worse, the high-paying passengers — the business travelers who had previously subsidized empty seats for the fee-less generation have left in chilling numbers. And business travelers may not come back to previous levels for a while — if at all.
Airline Fee History
Most think that airline fees got their start in 2008 with the run-up in fuel prices, which did spawn the most controversial fees: the fees for first and second checked-bags. However, fees were already a reality on some low-cost carriers, and you better believe the network or legacy airlines looked on in envy.
That’s because after the Sept. 11 terrorist attacks, the network airlines suddenly had to compete head-to-head with the fast growing domestic low-cost carriers, as well as the even faster-growing comparison shopping websites. This combination, at least in a legacy airline’s eyes — turned airline tickets into a “commodity”.
Even worse, this commodity was hard to differentiate — hard to make one airline’s commodity seem “more special” than another’s. Yet attempts were made, and this desire to differentiate spawned a new era in “unbundling” airline tickets — meaning, airlines began offering what they liked to call “optional services” — and what passengers learned to call, “airline fees”.
The archetype for airline fees? European low-cost airlines — including EasyJet and Ryanair, and later, U.S counterparts like Spirit and Allegiant. While most domestic U.S. airlines have closely eyed the skyrocketing non-ticket revenue of these carriers (in some cases, fees added as much as 20+% of total revenue), many of these carriers were also somewhat reticent to jump in themselves at first, opting instead to float one trial balloon after another. Some of those balloons were floated successfully, like the bag fees — while others, such as the $2 in-flight Cokes and water, simply crashed.
Airline Fee Revenue
The revenue associated with airline fees, especially those bag fees, looks eye-popping at first glance — yes, that was a “B” and not an “M” in front of “illions” which was certainly music to the ears of investors. However, Southwest, the lone holdout on the bag-fee front, makes the argument that passengers are defecting to them because of their fee-free policies — which makes up for the riches they’d accrue from bag fees (although even Southwest has made some concessions to this brave new world of fees, including charging passengers for “EarlyBird Check-in”).
So how do airlines justify their most controversial fee — for checking bags? Here’s how:
- Most of our most loyal passengers (elite miles members) don’t pay bag fees
- Fees are optional, like hot dogs at a baseball game — if you don’t want one, you don’t have to pay for one
- We haven’t seen major defections to airlines without fees
- Fewer checked-bags are good for fuel conservation
However, airlines continue to struggle with this rationalization message when it comes to consumers — frankly, it’s generally been a PR disaster. Travelers who don’t fly much get blindsided by bag fees at the airport, while veteran fliers wonder why the bag fee isn’t a lost bag “insurance policy” — and still others who pay the fee and check their bag are frustrated by an apparent double standard at the gate: it’s pretty annoying to watch the carryon crowd board with oversize and overweight bags for free, when you’ve followed the rules, and paid.
Airline fees have also caught the attention of Congress, where some lawmakers wonder why fees aren’t subject to the 7.5% domestic excise tax charged for base airfare and fuel surcharges on tickets — which is not uniformly disclosed during the ticket purchase process.
And of course, comparison shopping for airline tickets, the favorite hobby of a legion of bargain hunters, has become that much more difficult — as various fees cloud the
possibility of an easy apples-to-apples price comparison.
Airline Fee List
Could there possibly be more fees on the horizon? You don’t have to be a rocket scientist to know the answer is, yes — so let’s take a look at what airlines across the world already have on their fee menus, and what fees may be coming:
Bag Fees
Bag Fees are by far the most controversial since for decades two free checked-bags was the norm, but now we pay for the following:
- Checked Bags (first and second)
- Oversize Bags
- Overweight Bags (typically 50+ pounds)
- Door-to-Door Baggage Delivery
- Odd Size Items (Antlers, Surf Boards, Skis, etc.)
- Baggage Subscription (fee for multiple flights)
The “lipstick on a pig” award goes to Alaska Airlines for its baggage service guarantee: if bags are not delivered to baggage claim within 25 minutes, customers can get a $25 discount or 2,500 miles.
Reservations, Ticketing, Check-in, Boarding
The process of reserving and checking in is ripe with fees, from the punitive (making a call), to the annoying (cutting in line).
- Curbside Check-in
- Counter Check-in
- Phone Reservation
- Ticket Changes
- Early Boarding (at Gate)
- Quick Lines at Security
Loyalty Programs
Loyalty programs or Frequent Flyer programs are a potential hotbed of fees as miles trade as currency with a rich marketplace and are coveted by financial companies as teasers for their credit cards.
- Booking Award Travel
- Early Booking for Award Travel
- Change/Cancellation of Award Travel
- Buying Miles
- Buying Elite Status
When “free isn’t free” award goes to airlines that charged a “fuel surcharge” redemption fee in 2008 when oil prices spiked to $145/barrel.
In-Flight Entertainment & Comfort
Is the era of JetBlue seatback TV’s over? These systems take up precious weight and with carbon offsets coming is this really viable?
- Movies/Music/Games
- Headphones
- WiFi
- Blanket/Pillow
Recently, I was watching Monday night football on a flight, using a DirecTV app on my Iphone connected to Wi-Fi, how are seatback systems going to compete?
Lounge Service
With airline alliances changing recently, fancier airports and businesses pulling back travel budgets, is that $500/year access worth it?
- Executive Lounge
- Day Pass
Recently I watched as several irate SkyTeam lounge access holders were turned away on the day that Continental switched to Star Alliance.
Medical Services
- Wheelchair
- Oxygen
- Medical Equipment/Assistance
Food & Beverage
- Meals, Snacks
- Beverages
- Special Request Meals/Snacks
Pets
- Animals in Cargo
- Animals in Cabin
Airfare Rule Waivers
- Bereavement Fares (waive advance purchase/minimum stay)
- Change Fees / Penalties
Seats & Leg Room
- Advance Check-in Confirmed Seat Assignment
- Extra Leg Room
- Choice Seats
Standby Boarding
- Standby/Waitlist
- Confirmed Standby
Children/Travelers Assistance
- Unaccompanied Minors
- Senior Escorts
Airline Fees of the Future
While no one can say for sure what the airlines will come up with next, here are a few educated guesses on fees of the future:
- Cell Phone Usage
- Credit Card Usage Fee
- Seat Hold Fee
- Mobile Device Itinerary and Boarding Passes
- Change Fee Protection
- Auction Model (for a variety of services)
- Empty Seat Fee
- Lavatory Use (Yes really)
- Carryon Bags
- Reserved Bin Space
- Laser Luggage Tags
- Boarding Pass Printing