Airline Fees Cost Us $38 Billion Last Year

The Trend Toward Higher Fees Continues

Airline Fees Cost Us $38 Billion Last Year
September 1, 2015

Can you see the day where the average airline trip costs more in taxes and ancillary charges than it does in the actual fare? It is already possible to do that given the array of fees that we pay along the way.

According to a recent report by consulting groups IdeaWorks and CarTrawler, in 2014, U.S. air carriers racked up a $2.6 billion increase in combined fees and sales of frequent flier miles — a jump of 18.7% over the previous year. The increases are even higher worldwide, with a 20% jump up to $38 billion in fee-based revenue.

This barrage of fees takes place while average fares are rising at around 2-3% annually according to the Bureau of Transportation Statistics (BTS), and profits are rising thanks mostly to cheaper fuel prices. Fuel costs are over 25% of the airline industry costs, and the windfall caused the International Air Transport Association (IATA) to forecast a record $29.3 billion in profits, an 80% increase over 2014.

So why do the fees persist? Because airlines understand that low fuel prices will not last, and taking away fees only to re-impose them later does not go over well with the public. Profits on a per passenger basis are not that large in an industrial context — $8.27 per passenger in profit on a global average, and it won’t take much of a fuel cost rise to cut into that profit. Airlines are rationally shifting toward revenue they can control to neutralize costs they can’t control.

For low-cost carriers such as Spirit and Allegiant Air, fees constitute a large part of their revenue. Spirit Air is cited as the top airline for ancillary revenue as a percentage of their total revenue — a whopping 38.7%. Fees are keeping them in business.

Meanwhile, the largest three U.S. carriers (United, Delta, and the newly combined American and US Airways) racked up $13.7 billion in total ancillary revenue in 2014. Add in Southwest and the total goes to $15.6 billion, or 41% of the world's total.

To nobody's surprise, baggage fees constitute the majority of airline fees. Southwest/Airtran is the only holdout for free checked bags (up to two), and three U.S.-based airlines charge for carry-on bags. Frontier charges up to $50, Allegiant up to $75, and Spirit up to $100 per carry-on, although all three offer discounts through online booking and/or memberships.

Checked bags generally are around $25 for the first bag and $35 for the second, but for three bags or more prepare to pay anywhere from $75-$200 per bag. Those fees have prompted some travelers to ship their bags separately to their final destination, trading convenience for much lower costs.

The bag crunch is likely to get worse — the IATA has suggested a new, even smaller standard for carry-ons. Theoretically, it is designed to speed up the usual loading dilemmas and at-gate baggage checks by letting airline personnel instantly tell what fits and what needs to be checked. In practice, that likely means more checked bags and higher income for the airlines.

Common fees include the following:

  • Ticket Changes – Southwest still holds the line at $0, and Alaska Airlines will do the same if changed sixty days prior to the flight. Changes made on the same day of booking tend to be in the $25-$75 range, but most others are in the $75-$200 range. Delta and United can charge fees in excess of $500 in certain situations.

  • Booking Fees – Most airlines charge between $15 and $35 for booking over the phone or in person, although Southwest and Air Canada still do not charge.

  • Unaccompanied Minors – It's an extra $100-$150 in general to send unaccompanied minors on a flight. (Remember that on those days you're tempted to ship Junior across the country.)

  • Seat/Boarding Perks – Seat selection/room and priority boarding varies widely, anywhere from $4 for priority boarding with Allegiant to hundreds of dollars. The report noted Delta's Comfort Plus service alone raked in $350 million in 2014.

Other fees include charges for carrying pets (typically $100), drinks and snacks ($3-$16), and pillows/blankets ($0-$10).

You can find summaries of all the fees for domestic airlines online in several locations, but check the date of last update. This guide to airline fees is fairly recent (April 2015) but does not reflect the newly combined American and US Airways.

Fees are subject to change, so check with the airline before booking.


Photo ©iStock.com/adventtr

  Conversation   |   36 Comments

Add a Comment

By submitting you agree to our Terms of Service
Andrea | 09.01.15 @ 14:34
One airline we fly now is that way. The ticket was only like $10, but the fuel and tax made it $66 round trip.
Jackie | 09.01.15 @ 14:36
I travel with just a carry-on and a very large handbag. I'd rather spend my money enjoying my vacation than paying to take extra clothing with me. It's amazing what I can get into the carry-on bag by rolling items and if they need to be pressed there's always an iron in the hotel.
Sara | 09.01.15 @ 14:38
Never flew on an airplane before. So this is good information to have.
Steffanie | 09.01.15 @ 14:46
We rarely fly as it is. Thinking after reading this that driving is the best option. It's a great way to see the country.
Elaine | 09.01.15 @ 14:48
Never flown before, but I now know it might be better to ship bags first. I don't think I would ever have that many, but can't say for sure.
Britt | 09.01.15 @ 14:49
I haven't flown in years but WOW... the price for such are pricey.
Zanna | 09.01.15 @ 14:49
Smaller bag allowances, additional fees, and minimal comforts. Too bad we don't have a better mass transit system for buses / trains. People might start using bus and train options if they were available. Maybe people will start trying to have those options if the airlines keep this up.
Crystal | 09.01.15 @ 14:52
It's amazing all the fees we're hit with daily - from banks to airlines.
Sarah | 09.01.15 @ 14:53
I don't fly, because I have nowhere I need to be that fast, but the fees they charge are interesting.
Beverly | 09.01.15 @ 14:57
If only airlines disclosed ALL their fees upfront before you decide on which one to use. We chose a flight with Frontier, which used to be one of the more reasonably priced ones, but now once you added the fees(one of which was a fee to even have a seat.....you paid another fee if you actually wanted to pick where to sit) it wasn't any better. I don't mind paying most fees, as long as you list them up front, not at checkout - especially if you want to be an a-la-carte airline.
Irene | 09.01.15 @ 15:03
Fees are ridiculous as it is and it seems you pay more and get less each time you fly. If I'm paying 500 bucks for a plane ticket the least they could do is let me bring a suitcase and give me a lousy complimentary flat glass of warm Sprite and a 100-calorie snack pack without charging extra.
Christina | 09.01.15 @ 15:27
Southwest is awesome! They really care about their customers :)
Erin | 09.01.15 @ 15:30
My husband flies for business, but, as a family, we drive wherever we have to go. It takes longer, but flying is too expensive and too much of a hassle for us. Shipping bags separately is a pretty savvy idea.
Daniel Dohlstrom | 09.01.15 @ 15:31
Just another example of how what looks like a good deal is actually not .. have to read that fine print.
Kamie | 09.01.15 @ 15:35
I have never been on an airplane, and I do not ever plan to be on one.
Nancy | 09.01.15 @ 15:37
I lived in Germany for 3 years and when I would fly home to visit, I always shipped my luggage ahead of my trip. I did it for convenience. Now, I would do it to save some money. Otherwise, it sounds like Southwest is the way to fly.
Rindy | 09.01.15 @ 16:12
I don't like to fly and try to avoid it at all costs but these fees are ridiculous. Whatever happened to passing savings onto the consumer?
Stokes | 09.01.15 @ 16:25
I haven't flown in 15 years. It's easier, cheaper, and more convenient to drive, especially with kids. I haven't been anywhere over 5 hours away in 15 years, but it's a small price to pay to be able to take as much luggage as we can fit and make as many pit stops as we need.
Crystal | 09.01.15 @ 16:29
I don't usually fly, but I'll definitely consider all these fees if I ever decide to.
Carla Truett | 09.01.15 @ 16:37
I have never flown anywhere and unless its an emergency, I'm seeing that it is most likely cheaper to drive. These extras are ridiculous.
Victor | 09.01.15 @ 16:39
We will need to learn tricks to avoid this. I bet there are a lot of ways to find cheaper flights to wherever you are going.
Apryl | 09.01.15 @ 16:39
Corporate greed at its most disgusting.
gracie | 09.01.15 @ 16:57
These days I stick to only what I can pack in a carry-on and my messenger bag, which so far has always cleared as my purse. The fees are just too expensive!
trish | 09.01.15 @ 17:03
There are so any fees, some of which you don't find out until you are already at the airport "you didn't confirm a seat, you can here for $xx" "your bag is overweight by .000000000001 ounces, that will be $xxx" 'You are wearing brown on Monday, that is $xx" ...
Alec | 09.01.15 @ 17:10
This is troublesome considering my daughter and I may need to fly in the next few months. The last trip I took from NC to Cali for one person with stopovers, round trip, cost almost $600 in 2012 with a $25 bag fee! I understand the need to minimize the effects of fluctuating gas prices, but it's getting ridiculous where they try to get you. I'd much rather ship my bags ahead and just take a change of clothes or two in a small carry on with no fee.
Angie | 09.01.15 @ 18:33
We rarely fly and so I was not aware of the increase in baggage costs. Good to learn this - we'd be able to ship our bags more cheaply than paying the airlines' fees.
Christina | 09.01.15 @ 20:36
Never been on a plane before, no plans for it. Good information..
Donnie | 09.01.15 @ 20:37
Government should be involved - sounds like the CEOs and owners are getting greedy
Wanda Langley | 09.01.15 @ 22:10
I usually only take my carry on when flying. I have learned to pack just what I will need. I can always rinse some clothes out if my stay is extended.
Chelsey | 09.01.15 @ 22:43
I hate traveling by plane. The fees are just outrageous. I always try and pack light so that I don't have to pay too much in baggage fees. I have two children and one thing I like about the airlines is they let you check car seats for free. You are also allowed an additional carry-on like a diaper bag for them. That can be a lifesaver.
Rychana Vingia | 09.01.15 @ 23:27
I prefer Southwest Airlines because they always seem to have the least amount of fees.
Heather | 09.01.15 @ 23:31
I love flying Southwest. Not only do you get 2 checked bags for free per passenger, but you can also take a carry-on and a personal item for free. I see no reason to ever have to pay for your baggage. Plus, their flight crew is top notch. I've never had a bad experience.
Jane | 09.02.15 @ 00:31
It may not be the most luxurious or comfortable flight, but it's the least expensive when I fly with Southwest Airlines.
Leah Gardner | 09.02.15 @ 00:55
Id rather drive than spend money on a flight - especially because of all the fees they charge.
Vaughn | 09.02.15 @ 03:31
I just booked a vacation that includes a flight. It was definitely interesting reading each company's policies on different fees.
Jane | 09.02.15 @ 19:37
I think the fee to check baggage (usually $25 per bag) is just too high, and people like me, who have to watch their money, won't choose an airline that charges baggage fees. I would love to fly on an airline with comfortable seats and more legroom, but since I only fly when traveling for a vacation, I need to check baggage. If I'm charged $50 for two bags, to me I see that as a dinner I could have had at a restaurant.
$commenter.renderDisplayableName() | 12.05.16 @ 21:00
{comment}

  Our Professionals Are Available to Help!

  Can't find What You're Looking For?