Shopping for airfares, once a reasonably straightforward affair, is straightforward no more. Fees for extra legroom, checked bags, on-board Wi-Fi and meals, along with the explosion of complicated points programs, have made it ever harder to get an apples-to-apples comparison of the real cost of a plane ticket.
And if you have a hunch that the airlines use that complexity to their own advantage — finding opportunities for profit in the fine print — your suspicions have now been confirmed.
A new report from business intelligence firm IdeaWorks and travel tech company CarTrawler shows that airlines’ ancillary revenues are up. Way up.
By the numbers
In 2008, United Airlines made an average of $22.86 per passenger in ancillary fees. In 2017, that number shot up 70% to $38.83. Qantas, which made $15.83 extra per passenger in 2008, saw that number spike 169% to $42.55 in 2017.
Low-cost airlines saw some of the biggest percentage gains, with Spirit’s ancillary fees rising 174% from $18.61 to $50.97 per passenger and Frontier’s estimated at a whopping 1,206% over 2008, surging from $3.70 per passenger to $48.33 nine years later.
» Learn more: Landing the best airfare is a matter of timing
In terms of total dollars, the biggest airlines raked in the most last year from these non-ticket revenue streams:
- United brought in $5.75 billion in ancillary fees in 2017, 41% of it from its frequent flyer program and 59% from traveler fees and commissions.
- Delta made $5.4 billion, with 56% of it from frequent flyer programs.
- American Airlines came in third, with $5.3 billion in extra revenues, 59% of it from frequent flyer revenues.
- Southwest, Ryanair, Air France/KLM, Lufthansa, Alaska Air Group, Air Canada and easyJet, respectively, rounded out the top 10.
Footing the bill
Stretched over a decade, these fees paint a stark picture. In 2007, the top 10 fee-earning airlines brought in a total of $2.1 billion from these sources. In 2017, that number skyrocketed to $29.7 billion.
Not all that money comes directly out of travelers’ pockets, though. Ancillary fees include things like the money airlines earn from selling miles to banks, which banks use to entice new credit card customers. The fees also include commissions an airline earns when you book a hotel or car through its website. But because neither airlines nor banks are in business to lose money, you can bet that in some form or another, consumers are footing the bill.
» Grab your carry-on: Find the best travel credit card for your needs to start earning points and miles now.
What you can do about it
How can you avoid chipping in more than your fair share to these massive airline earnings? Be a smart consumer.
- Pay your airline credit card off in full and on time every month. Credit card issuers can spend a lot of money buying miles in part because they make a lot of money charging interest and late fees.
- Check seat maps at SeatGuru.com. Some economy class seats are so tight it makes sense to pay for extra legroom. Others are comfortable (enough) without coughing up more money.
- Pack smart. Checked-bag fees can add $30+ per passenger to your trip cost. Consider whether you can squeeze everything you need into a carry-on bag.
- Earn airline miles on hotel bookings. If you decide to book your hotel through an airline website, consider properties offering airline miles, which are displayed when you search by destination and date.
- Know the fees for “free” rewards flights. Seats booked with miles are never exactly free. They come with fees ranging from just a few bucks to literally hundreds. Your points are more valuable if you don’t have to pay a lot of cash when you spend them.
How to maximize your rewardsYou want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
- Airline miles and a large bonus: The Chase Sapphire Preferred® Card
- No annual fee: The Wells Fargo Propel American Express® card
- Flat-rate rewards with no annual fee: The Bank of America® Travel Rewards credit card
- Premium travel rewards: The Chase Sapphire Reserve®
- Luxury perks: The Platinum Card® from American Express
- Business travelers: The Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice:
Fall 2018 hotel points promotions: Which ones are worth your time?
How to snag credit card rewards flights in peak season
Travel rewards bucket list: Showering on a plane