BUSINESS

Baggage Fees Boosted U.S. Airline Revenue By $3.5B

05/04/2015 04:14 EDT | Updated 05/04/2016 05:12 EDT
The 27 U.S.-based passenger airlines collected $3.5 billion US in baggage fees and $3 billion in reservation-change fees from passengers in 2014.

The figures released Monday by the U.S. Department of Transportation show an increasing reliance on passenger fees for revenue among U.S. airlines.

In 2008, U.S. airlines collected $1.1 billion in baggage fees, so they have more than tripled in the intervening six years. The cash collected through fees is up five per cent in the last year alone.

Fees for reservation changes have doubled from $1.6 billion in 2008 and are up six per cent from last year.

Other fees, such as revenue from seating assignments and onboard sales of food, beverages, pillows, blankets and entertainment are not included in those numbers and not counted separately by the airlines.

But the category the federal agency calls "other revenue," which may include pet transport, services to other businesses and passenger food, is up by 13 per cent in the year to over $4 billion.

Baggage fees made up about 2.1 per cent of total operating revenue, while fares were 75 per cent of revenue. Fees for reservation changes were about 1.8 per cent of the revenue stream.

The report shows 2014 was a good year for the U.S. airlines, with revenue and operating profit on the rise from 2013.

Collectively, the airlines reported a $14.6-billion pre-tax operating profit in 2014, up 29 per cent from $11.3 billion in 2013.

Net profit, including one-time losses, slipped to $7.5 billion last year from $12.2 billion in 2013.

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