US Airways, the dominant carrier at Charlotte Douglas International Airport, ranked eighth worldwide last year for revenue generated from sources such as fees and co-branded credit cards, according to a report Monday.
Such money, known as ancillary revenue, has become increasingly essential for airlines as fuel prices stay high and customers resist fare increases in a weak economy. Although airline executives freely admit that the profusion of new fees over the past several years arent exactly popular with travelers, they insist they need to charge passengers more for services that were once free.
The annual Amadeus Review of Ancillary Revenue was released Monday by European airline consulting company Amadeus. In 2007, the reports first year, only 23 airlines worldwide disclosed their ancillary revenues (which includes everything outside the price of airfare, such as fees and credit card revenue), which totaled $2.45 billion. Last year, 50 airlines disclosed ancillary revenue, and they generated a total of $22.6 billion.
US Airways generated about $13.41 worth of ancillary revenue per passenger based on the companys reported total of 71 million passengers in 2011, according to Observer calculations and Mondays report. Thats well below Australias Qantas Airways, which generated the highest per-passenger revenue, with an average of $50.82.
Some of the most visible ancillary revenue streams airlines have tapped are baggage fees. While the charge for a checked bag was once bundled into the price of a ticket, most airlines now charge for each checked bag. US Airways, for example, charges $25 for customers first checked bag on domestic flights.
The Amadeus report found that US Airways generated $1.09 billion in ancillary revenue during fiscal 2011. That put US Airways in the No. 8 spot worldwide for ancillary revenues. US Airways total ancillary revenue was down slightly from 2010, when the airline brought in $1.18 billion and ranked No. 5 on the worldwide list.
At the top of the list for 2011 were the big three U.S. airlines: United Continental ($5.2 billion in ancillary revenue), Delta Air Lines ($2.5 billion), and American Airlines ($2.1 billion).
Those three reigned at the top largely due to their colossal size. In terms of ancillary revenue per passenger, United Continental was only fifth worldwide, with an average of $36.47 per passenger.
Southwest ranked fifth on the list, with almost $1.2 billion in ancillary revenues. Though the company lets passengers check two bags for free, Southwest does charge for a host of other services. Its $10 EarlyBird service, allowing preferential boarding, generated $142 million, and its Business Select service, with early boarding and a cocktail, generated $96 million.
Tempe, Ariz.-based US Airways operates more than 600 daily flights from Charlotte Douglas, its busiest hub. The airline accounts for roughly 90 percent of the citys daily air service.
US Airways has pointed out that without fees, it would have posted a loss in 2011, which would have been the airlines third annual loss since 2008. But instead, thanks largely to the extra money, US Airways posted a 1 percent profit, with $111 million worth of earnings.
At US Airways annual media day this spring, company executives credited ancillary revenues with preserving the industry at a turbulent time. US Airways President Scott Kirby even said, I dont think the industry would exist today as it does without ancillary revenues.
US Airways CEO Doug Parker said at the event that the fees are here to stay, and though he doesnt see new ones on the horizon, there are no guarantees.
Were certainly not looking at putting any new fees in place, Parker said. I cant say for certain there wont be any new fees in the future.