MONEY & BUSINESS: Airlines will make a record $118B in junk fees this year
The airlines industry is set to make a record-shattering $118 billion from so-called “junk fees” this year — despite President Joe Biden’s vow to clamp down on the surreptitious surcharges, according to a study.
The global haul is 7.7% more than the previous record set in 2019, when airlines raked in $109.5 billion in ancillary revenue before the industry came to a pandemic-induced halt, according to a study conducted by airline consulting firm IdeaWorksCompany and car rental service CarTrawler.
This wide-range of activities includes commissions gained from hotel bookings, the sale of frequent flyer miles to partners, and a la carte services that include checked-baggage fees, along with add-ons like wifi, seat selection and meal upgrades.
“Low-cost carriers continue to have the edge on driving ancillary revenue streams, accounting for approximately 31% of market share in this area,” the report said.
“However, we are increasingly seeing US airlines gaining momentum with the successful roll out of loyalty programs and frequent flyer benefits.”
Nearly every airline now charges fees for checked baggage — first-checked bag included — while some budget options make passengers pay for any carry-on larger than a purse.
The worst offender of these bag-related add-ons were American and United Airlines, which made $1.4 billion and $1.1 billion off baggage fees last year, respectively, according to DOT figures.
According to American’s website, most flights will charge non-status passengers $30 to check a bag. The airline, which updated its checked bag policy on Sept. 30, has made all bag fees non-refundable and apply on a per-person basis.
United charges a standard $35 for checked baggage, per its website.
Baggage fees accounted for roughly 2.5% of both American and United’s 2022 fiscal year revenue of $56.44 billion and $44.95 billion, respectively.
Meanwhile, airlines collectively made $700 million on cancellation and change fees in 2022, according to the DOT.
The add-on fees are oftentimes not included in airline ticket prices listed on airliners’ websites. Instead, they’re tacked on upon checkout, charging travelers as much as hundreds of dollars more than what was originally advertised when they were selecting flights.
President Biden on Monday announced a new initiative that would give air travelers more transparency at baggage and flight-change fees as soon as they search for flights.
“You should know the full cost of your ticket right when you’re comparison shopping,” Biden said during a meeting of the White House Competition Council.
The new rule will help consumers “pick the ticket that actually is the best deal for you,” the president said, citing fees charged by airlines to check luggage or to seat families together.
The Post has sought comment from the Department of Transportation and Airlines for America (A4A), a trade group that represents US-based commercial airliners including American, United, Delta and Southwest, among others.
Biden first launched a broader effort to crack down on junk fees imposed by ticket companies, banks, airlines and other industries in September 2022.