Airline revenue from passenger fees soars 18.8%

The airline industry is pocketing more revenue than ever from passenger fees.

By the end of the year, the world’s airlines are expected to collect $59.2 billion in passenger fees and other income besides airfares, an 18.8% increase over last year, according to a new forecast on airline revenue.

Airlines began in 2008 to charge fees to check bags and buy food, drinks and other extras as a way to boost revenue during the Great Recession. Since then, revenue from passenger fees has climbed steadily.

Based on financial records and analysis of 180 airlines worldwide, Wisconsin-based IdeaWorks Co. estimated that the industry will generate $36.7 billion from passenger fees, including checked bag fees, food sales, charges to connect on onboard Wi-Fi and early boarding fees.

The remaining $22.5 billion will come from such transactions as the sale of frequent flier miles to credit card companies and commissions from bookings of hotel rooms and rental cars by airline passengers.

The fees generate nearly 8% of the industry’s total revenue, up from 6.7% in 2014, according to IdeaWorks, an airline consultant on such fees.

In the U.S., the biggest carriers are expected to collect $18.1 billion in these fees, up from $15.4 billion last year, according to the forecast.

IdeaWorks’ analysis of passenger charges show that revenue from bag fees among U.S. carriers has dropped slightly over the last year while revenue rose from the sale of food, early boarding access, drinks and Wi-Fi connection fees, among other onboard extras.

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