$93b in fees, extras for airlines in 2018

Airlines in the United States and Europe led the world’s carriers in collecting a total of $92.9 billion (Dh341 billion) from extra charges to check bags, upgrade seats and change reservations, among other services that once were included in the price of a flight.

The “ancillary revenue” projected for 2018 is expected to be 13 per cent higher than the $82.2 billion collected by carriers last year, according to a study by IdeaWorks Co., a Wisconsin-based airline consultant. Such revenue includes the sale of miles and other services to banks to distribute to loyalty reward programme members.

Total revenue may surge in the next few years when airlines in China — the world’s most populous nation — are expected to adopt the US and European tactics of charging passengers fees for extra services and upgrades, said Jay Sorensen, president of IdeaWorks.

“They are very nervous about it but are realising there is tremendous revenue gain to be had,” he said of China, where airline passengers have more than tripled in the last decade.

Basic revenues

In the US and Europe, a reason for the increase in fees and extra revenue in the last year is the growing popularity of no-frill tickets known as “basic economy”, which don’t give the option to check a bag or reserve a seat. Those cost extra.

Sorensen’s study predicts that airlines throughout Africa, Asia, Middle East and South America will soon begin to offer similar fares.

Airlines like basic economy fares as the rock-bottom prices entice passengers, but when they learn the fares don’t include many basic services usually included in the ticket price, most fliers buy an upgraded fare.