By JOANNA PRISCO
From checked baggage fees to frequent flyer programs to $25 pillow and blanket sets, revenue beyond what airlines charge for tickets has become a cash cow for the industry, according to a new report released this month.
In the 2013 CarTrawler Yearbook of Ancillary Revenue by the consultants IdeaWorksCompany, financial information from 116 airlines was analyzed "to develop a picture of ancillary revenue activity by carriers worldwide." The report determined that earnings from frequent flier activities, a la carte features, and commission-based products have more than doubled since 2009--reaching $27.1 billion this year.
"A big chunk of ancillary revenue can be attributed to frequent flier programs, especially in the United States and in Australia. It's not just fees," said Jay Sorensen, president of IdeaWorksCompany. "But it's interesting when you visit the websites for different airlines to see that there is a new crop of companies like Air France and United now advertising these a la carte services," such as comfier seating or exclusive meal options that can be reserved in advance.
From Aeroflot's selling $171.3 million of duty free goods on its flights during 2012--and attaining a 115% mark-up on cost--to EarlyBird's boarding providing $161 million for Southwest in 2012, the findings revealed in the report indicate that airlines are increasingly looking for new ways to boost profits.
Some of the most aggressive carriers can generate more than 20% of their total revenue from fees and other activities. Florida-based carrier Spirit Airlines came in first, producing 38.5% of its total revenue from ancillary sources, such as credit card usage fees and $100 carry-on baggage charges.
Spirit Airlines did not immediately respond to requests from ABC News for comment.
"They have a bare bones product and if you take a wheeled item with you on the aircraft, you'll end up paying for that, if you want to sit in an exit row or if you want a drink," said Sorensen. "They also promote things like booking a car rental once you land, for which they receive a commission, and have become a retailer of sorts. But they also offer an affordable product if you avoid all of those add-ons."
Low-cost carriers are often criticized for the excess of charges that accompany their services, but such activity doesn't appear to be hindering passengers from booking on them. Ryanair in Ireland generated 21.8% of its total revenue from ancillary sources that ranged from assigned seating fees to infant charges--and is in the middle of a robust expansion.
"Ryanair carried over 9 million passengers in August, the first airline in Europe to ever do so," a representative told ABC News, "and we remain on course to carry over 81 million passengers this year, more international passengers than any other airline in the world, with over 80 new routes on sale this winter."
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