Airlines rake in billions from extra fees

airline feesPassengers paid out billions of dollars last year in airline fees for everything from checking their bags, bringing their pets on board and making changes to a reservation, according to a new government report.

Carriers raked in $7.8 billion in revenues from ancillary fees in 2009, up 42% from a year earlier, according to figures airlines reported to the federal Bureau of Transportation Statistics. Checked baggage fees last year comprised about one-third of this revenue, or $2.7 billion.

And it won't come as a surprise to travelers that the amount airlines collected in fees for checked bags alone more than doubled last year when compared to 2008. Until recently, carriers were vague about how much money these fees were bringing in, but this new reports shows that they amount to much more than chump change.

Cash-strapped airlines started unbundling fees for checked bags and other costs from the overall price of an airline ticket in 2008 as the price of oil soared and the worst recession since the Great Depression prompted many travelers to stay home.

Now, passengers are required to pay for everything from food and drink, to blankets and pillows, to seat assignments and on-board entertainment. Some carriers even charge $2 for a soda and $10 for an aisle seat. For a guide to who charges what go here.

Even with the jump in additional fees for passengers, many carriers are still struggling to make ends meet.

Network airlines reported a loss of $275 million in the fourth quarter of 2009, according to the BTS report. Low-cost and regional airlines, however, reported operating profits for the last three months of the year.

Delta, currently the world's largest airline, collected $1.64 billion in ancillary fees in 2009, more than any other carrier, according to BTS. A combined United and Continental would come in second, bringing in more than $1.16 billion last year. American reported $1.02 billion in revenues from these fees and US Airways $912 million.

Even Southwest Airlines, which hopes that the fact that it doesn't charge for the first two checked bags will lure passengers away from carriers that do, still brought in enough in ancillary fees to earn fourth place in the rankings, with $617 million in revenues last year.

For Miramar, Fla.-based Spirit Airlines, which caused an uproar earlier this year when it announced it will start charging as much as $45 for a carry-on bag that won't fit under the seat for reservations booked after April 6, ancillary fees represented more of its operating revenue in 2009 than any other carrier.

Spirit, which sells itself as a "ultra-low fare" airline and offers some flights on its web site for $9 each way, charges fees for everything from seat assignments, snacks, drinks, pets and kids traveling alone. Altogether, these charges comprised 20.9% of Spirit's operating revenue in 2009, according to the BTS report.
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