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Airlines make fortune 'nickel and diming' passengers
By Catholic Online (NEWS CONSORTIUM)
October 20th, 2011
Catholic Online (www.catholic.org)
October 20th, 2011
Catholic Online (www.catholic.org)
Flight travel is usually expensive. It's only set to become eve more so, as airlines begin their "add on" fees. Such hidden fees as "bag fees," can cost as much as $25, and travelers will see a lot of their money eaten up before they arrive at their destination.
LOS ANGELES, CA (Catholic Online) - According to a new analysis by the Amadeus Worldwide Estimate of Ancillary Revenue, those fees altogether can climb to $32.5 billion. In short, the global airline industry stands to make a 43.8 percent increase in 2011 over the year before in ancillary revenues alone."Half of the increase is a result of the airlines doing better year over year," Jay Sorensen, president of IdeaWorks, which co-authored the report says. "The other half is because the airlines are clearly becoming better retailers, increasing revenues of existing activities and adding more of them."
Sorensen says that seven U.S. airlines, that include Alaska, American, Delta, Hawaiian and US Airways, along with the still-separate operations of Continental and United, will earn an estimated $12.5 billion -- up 87 percent from 2010.
From those monies earned, 20 percent will likely come from baggage fees and 30 percent from other à la carte services and onboard sales. The other half will come from the sale of frequent-flier miles via co-branded credit card activity.
The à la carte fees are also likely to begin appearing in surprising places that consumers haven't seen before, as companies like Amadeus work to integrate fees into their global distribution systems (GDS). Those systems provide the link between the airlines, online travel agencies and other third-party sellers.
"We want to be able to provide that information across carriers on a comparative basis," Robert Buckman, director of airline distribution for Amadeus says. "If you buy Wi-Fi service and pay $10 for it, you want to know it will be delivered onboard the aircraft."
Proponents suggest that this will help move the industry away from a fee system that many travelers consider "punitive" and toward one that provides more options and a better value proposition.
"People call it nickel and diming," said Sorensen. "Well, it is nickel and diming if there are hidden or silly fees. But if the charges are disclosed and the prices are fair, it can be a benefit to the consumer."
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