Airline Passengers Don’t Mind Paying Fees for These New Perks

Revenue from fees has become key to airline profitability

   

Airline Passengers Don’t Mind Paying Fees for These New Perks

dreamliner 787 interior Airline Passengers Don't Mind Paying Fees for These New PerksPassengers who want a bit of added comfort when they fly can get additional perks … if they pay for them.

Carriers are offering benefits like iPads pre-loaded with movies, more legroom, lounge access and quicker boarding. Airlines came under fire in recent years for demanding fees for services that had once been offered for free. Now, carriers are moving to introduce charges for services that cater to passenger comfort, the Associated Press notes.

airplane cabin interior empty 185 flickr Airline Passengers Don't Mind Paying Fees for These New Perks
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That may ultimately include services customized to an individual passenger’s specific profile — using information gleaned by analyzing consumer data. Delta‘s (DAL) CEO notes that the airline already knows who its passengers are, where they travel and what services they currently use.

The reason carriers have been quick to increase fees is no mystery — the industry generates more than $15 billion annually thought fees. In fact, higher fees have kept many airlines in the black. An executive at Southwest Airlines (LUV) notes that fees are an essential way for carriers to cover their costs.

However, revenue from existing services like reservation change and baggage fees have begun to slip, prompting airlines to look for ways to get fliers to pay for service improvements.

United Airlines (UAL) has altered its Economy Plus fares, which offer additional legroom, pricing individual seats based on their position in the plane. That simple alteration has allowed the carrier to increase its fee revenue by 13% this year. Last year, the airline boosted its club fees.

AMR‘s (AAMRQ) American Airlines now bundles services together, allowing passengers to choose a bundle, instead of sorting through lists on their own. Other airlines are exploring similar options.


Article printed from InvestorPlace Media, http://investorplace.com/2013/09/airline-passengers-dont-mind-paying-fees-for-these-new-perks/.

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