Airlines Are Making Billions Off Your Checked Bags and a la Carte Meals
While passengers complain about baggage charges and pricey a la carte meals, airline companies could be cashing in to the tune of over $40 billion.
The global projections for over 170 airlines come from a June CarTrawler and IdeaWorksCompany report on revenue activity of 53 global airlines that report their ancillary revenue.
"Today, airlines are not just competing with each other for a share of the passenger market, they’re also competing for a cut of each passenger’s total travel budget," CEO of CarTrawler Mike McGearty said in the report.
According to the report, U.S. airlines will rake in roughly $14.3 billion this year, or one-third of "extras" sales from just seven airlines: Alaska Airlines, American, Delta, Hawaiian, Southwest, United, and US Airways. It’s worth noting that 60 percent of this revenue for major U.S. airlines comes from the sale of frequent flier miles to partners. Helping book travel and hotel reservations has also proved lucrative for many airlines; Hawaiian Airlines, for one, expects to double its revenue from such business over the next few years.
Airlines around the globe are relying more on ancillary revenue every year. This year, an estimated 9 percent of global airline sales will come from add-ons, nearly tripling the projected 3.2 percent measure from only 3 years ago, in 2010.
However, airlines are anything but equal in this regard. While traditional carriers, like Gulf Air and Singapore Airlines, still only earn an estimated 3 percent of their revenue from checked bags and a la carte meals, low-cost carriers and new, hybrid airlines earn upwards of 20 percent of their revenue by cashing in on these extras.
Despite rumblings from consumers, the current trend is unlikely to reverse itself.
Top image: l i g h t p o e t /Shutterstock.com