Airline fees remain a “pain point” for many travelers, and the pain is getting worse. Despite all the focus, however, you still see some public confusion. The latest exhaustive report (104 pages!) from IdeaWorks presents a good starting point for a dispassionate assessment of the realities and myths of airline fees.
Big, But Not That Big
Airline fees are big—but not as big as some might think. Last year, reports IdeaWorks, aggregate “ancillary revenues” from the world’s top 10 airlines amounted to almost $26 billion, up from $8 billion in 2008. That figure has already generated “wow, look at all those fees” stories in the press, as some writers conflate “aggregate revenues” with “fees.” But that would be wrong. American, Delta, and United accounted for about half that total, and more than half of those lines’ ancillary revenues came from sale of frequent-flyer miles to the banks that issue the lines’ co-branded credit cards—revenues, yes, but not fees.
Ultra-low-fare lines, on the other hand, do generate a lot of their revenue from fees. A detailed breakdown of Spirit’s total revenue shows that only 57 percent came from base fares, with rest coming from fees: 18 percent from checked bags, 14 percent from online and call center, and the remaining 11 percent from various minor sources. And that sort of breakdown is probably similar for other ultra-low-fare lines.
Not Really “Hidden”
Most flak about “hidden airline fees” is a red herring: Any fee you have to pay to fly is included in the posted fare from the get-go, with no subsequent surprises. That’s a requirement from the U.S. Department of Transportation and corresponding agencies throughout most of the developed world. Once you pay the posted base fare, you can complete your trip without paying anything else.
Granted, fees for what used to be “free” can range from annoying to enraging, and in many cases, supposedly “optional” extra services are actually necessary for many travelers. But those fees are not hidden, at least when you buy your ticket through an airline website: As you go through the purchase process, the airline gives you the chance—or, more accurately, urges you—to buy more, along with the airfare. And fees that aren’t part of the normal purchase process are disclosed in various consumer documents.
Some fees really are “hidden,” in the sense that you have to dig to find them. The most onerous is the ticket change fee, which is disclosed in the fine print but does not pop out in the normal purchase process. Another is the “fuel surcharge” or “carrier-imposed fee” some lines incorporate in their fare structure. But those fees are fully included in posted ticket prices; they come into play only on some frequent flyer trips, companion
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