Airlines around the world have been gradually moving toward a business model that relies more and more on additional charges – such as for preferred seating, extra legroom and even checked baggage – for revenue growth.
53 of the major world airlines earned a staggering $27.2 billion from these charges in 2012. This is nearly 12 times the $2.4 billion earned by 23 major airlines charging additional fees in 2008.
An increasing list of products and services including food, drinks, Internet and in-flight entertainment content access, priority security screenings, exit row seats, early boarding and lounge access are now being offered as paid options.
Full-service airlines are also jumping on the a la carte pricing bandwagon, which until now had mostly been adopted by low-cost carriers, to boost revenues.
For example, Air France/KLM charges additional fees for better seats, premium meals, checked bags (within Europe) and holding – but not buying – a reservation.
US airlines such as United and Delta earn most (nearly 80 percent) of their ancillary revenues by selling frequent flier miles in partnership with credit card companies; checked baggage-fees account for the bulk of the remaining 20 percent of their additional revenue.