By Mark Faldmo, Jr.
In the past few months, airlines have been breaking out ancillary fees such as baggage fees. The airlines say that these fees are what customers want and it will lower the cost of travel by providing the opportunity to pay only for what you use. Believe it or not, there are people out there that say they are willing to not only pay baggage fees but pay fees for priority boarding, priority seats and more. Travel agents, consumer protection groups, and many customers say this is nothing more than a nickel-and-diming scheme. The airlines say it is what their customers want.
Here is a look at the numbers. In 2011, domestic airlines collected $14.2 billion in ancillary fees. Of that amount, $7.1 billion was paid by consumers for baggage fees, change fees, unaccompanied minor fees, and other types of consumer fees. The remaining amount was collected from credit card companies for affinity and frequent flier programs and not paid directly to the airlines by the customer. In 2000, when baggage handling was included in the cost of an airline ticket, airline customers spent $124 billion on air travel. In 2011, there were 10 million more airline tickets sold, yet the total amount spent on air travel including ancillary fees paid directly by the customer such as baggage fees and change fees was $121 billion. This is approximately $3 billion less overall and for 10 million more airline tickets!
So it appears the airlines have a correct picture of the consumer landscape. Consumers are paying less for air travel by only paying for some services. By looking at the hard dollar figures it appears the airlines may have an argument that their new way of creating an a la carte menu for flyers is saving customers’ money.
There are those willing to pay for these services, but they are mostly business travelers whose fees are paid by their employers. For the non-business traveler, it is a much more negative perception. They are now paying for something that was included before.
By breaking out consumer ancillary fees from the cost of the ticket, airlines are trying to control their costs. The numbers seem to confirm that the overall cost of air travel has dropped for consumers even though almost everyone grumbles about it when they have to hand over their hard-earned cash for additional fees above what has already been paid.