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Report reveals airline fees skyrocketing

Consumer Reports News: June 02, 2011 08:38 AM

Money generated from levying fees on passengers has become a huge cash cow for the airline industry, according to a new report from the consulting firm IdeaWorks and the travel technology company Amadeus. The analysis examined the financial filings of 104 airlines worldwide and determined that what the industry terms "ancillary revenue" from fees rose from $2.5 billion in 2007 to $21.5 billion in 2010.

The report highlighted two trends: Airlines are introducing new forms of a la carte services, and they're becoming "savvy retailers" of other products, such as hotels and car rentals, on their websites. This underscores Consumers Union's efforts to provide more travel pricing transparency, so shoppers understand the bottom-line rates they book.

The top three airlines for ancillary fee revenue are U.S. carriers: United/Continental at $5 billion; Delta at $3.7 billion; and American at $2 billion. However, when ancillary fees as a percentage of total revenue are examined, the top two are smaller U.S. airlines featuring "unbundled" pricing: Allegiant (29.2 percent) and Spirit (22.6 percent).

Consumer Reports' June issue includes a survey of nearly 15,000 readers sharing their recent airline experiences. Not surprisingly, Southwest and JetBlue—the only two domestic carriers that do not charge for first checked bags—fared better than all the others.

A few tips for avoiding airline fees:

  • If it's feasible, pack lightly and wisely because baggage fees add up quickly.

  • Whenever possible, fly carriers with friendly fee policies. Southwest does not charge for your first two checked bags and JetBlue does not charge for your first checked bag.

  • Spirit Airlines charges for your carry-on bags, with fees ranging from $20 to $45; it remains to be seen if larger domestic carriers will match this policy.

  • You can avoid fees for onboard meals by bringing your own food (but not liquids that violate airport security restrictions).

  • Always read the fine print before booking, particularly if you're doing it yourself online. Depending on the type of reservation, there can be a host of change fees levied by the airline and/or the travel site.

William J. McGee

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