Keeping cheap fares, be they cheap airplane tickets or cheap vacation packages, cheap is becoming increasingly challenging as the airlines keep raising their fees. Ancillary (which often translates to fee) revenue of the worlds airlines is expected to come in at about $22.6 billion in 2010 vs. $13.5 billion last year.
Travel experts predict that future airline fees could more than triple if the airlines get aggressive like Allegiant and Spirit. Spirit now charges passengers a fee to carry-on luggage if that luggage will not fit underneath the seat in front of the passenger. Several airlines have started charging customers fees in order to secure seat assignments in advance of arriving at the airport.
Airlines growing fees have created a backlash, particularly in the U.S., where congressmen have proposed legislation that would tax fees, curb additional charges, and require airlines to reveal all costs of flying before customers purchase airline tickets.
The following are just a few examples of how airlines are becoming increasingly innovative in generating ancillary revenue:
Continental has implemented flexible pricing for seats with additional legroom. Flexible pricing means that when demand for those seats rise so do their prices.
American Airlines now charges an express seat fee for the right to sit in the first few rows of coach.
KLM is testing a meal program that allows customers to place meal orders before boarding their flights. This option is available on eight long haul routes from Amsterdam.
AirAsia offers 10 pre-flight entre options on its website.
As much as travelers have complained about rising airline fees, there is no evidence that such complaints are impacting airlines decisions regarding fees. Fee income is such a significant part of airlines revenue that it is likely here to stay. Only if passengers refuse to pay certain fees will airlines re-evaluate the wisdom of such fees.
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