We've heard all about airlines assessing new fees on everything from checked baggage to exit-row seats to skycap service. But if you think things are bad now, you should prepare yourself. They could get worse. Much worse.
"U.S. airlines are definitely moving in the direction of charging for as much as they can get away with," says Henry Harteveldt of Forrester Research. "Charging for services that used to be included in the price of a ticket is a profit center for airlines." He's not lying. These charges, known within the industry as ancillary revenue, netted American Airlines $350 million last year.
If you want to see ancillary revenue taken to the extreme, look across the pond at European airline Ryanair. Since its founding in 1985, Ryanair has grown into an industry giant by flying into secondary airports and offering in-flight service that makes U.S. airlines look downright opulent. Ryanair fills its planes with fares that give new meaning to the term "dirt cheap," sometimes offering promotions where tickets are free, leaving passengers to pay for only taxes and fees.
Make sure you read that last part again. The part about the fees.
Ryanair assesses fees that read like something out of The Onion. They'd be hilarious, if they weren't all real. It's a long, long list, with highlights that include:
- Ticket change fee - $140
- Fee to check in at a ticket counter - $8
- Credit card processing fee - $12
- Fee for flying with an infant on your lap - $40
- Unaccompanied minor priority preboarding fee - $8
- Fee to speak with a Ryanair rep by phone - $2 per minute
- Mandatory "aviation insurance levy" - $6.25
This doesn't even take into account the on-board experience. Ryanair planes have no seat-back pockets or window shades, and seats don't recline. In flight, passengers are treated to a virtual flea market, with flight attendants hawking water, soda, cocktails, snacks, sandwiches, toys, jewelry, liquor, perfume, lottery tickets, travel insurance and cellphone minutes.
The airline needs to be given credit, though: it's opened Europe to a whole group of vacationers who previously couldn't afford to fly. That's a good thing.
And it's not a given that U.S. carriers will follow Ryanair down the fee-for-everything road, though Harteveldt says more ancillary revenue charges are coming. American Airlines now charges passengers five dollars to redeem frequent flier miles online, and other carriers are toying with the idea of flight attendants selling retail products on-board. With airlines desperate to boost revenue, you can't help wondering if American's checked-bag fee is just the tip of the iceberg.
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