If you’re old enough to remember the early 21st century (PLEASE tell me you are…), you’ll recall the U.S.-based airlines were in a heap of trouble right after 9/11, and again (or still) during the Great Recession of about 10 years ago, to the point where they eventually got some huge bail out money from the government in the hopes they could pull through. Well, apparently they did, as evidenced by the results of a new study that just came out which includes just how much money the major airlines pocketed in 2016.
According to this recently released report (heads up: the link is a PDF) by Wisconsin-based airline consultant IdeaWorksCompany, 66 of the world’s largest 138 airlines made over $44.6 BILLION just from passenger fees, frequent flyer programs and commissions (for directing passengers to hotels and car rental companies, for example) in 2016 alone. And this doesn’t even include how much they made from ticket revenue – we’re just talking fees and commissions (also called ancillary revenue)! In fact, some of the low-cost US-based airlines such as Spirit Airlines, Allegiant Airlines and Frontier Airlines made over 40% of their revenue just from fees and commissions (as an example, Spirit Airlines charges for nearly 40 different extras)! An average of the largest airlines generated nearly 10% of their revenue from such fees (the rest came from fares), which is still about 1% more than what they earned from fees in 2015.
To compare, in 2007, the top ten airlines (Air Canada, Air France/KLM, American, Delta, easyJet, Lufthansa Network, Qantas (excluding Jetstar), Ryanair, Southwest and United) generated $2.1 billion in ancillary revenue. In 2016, they earned more than $28 billion! Don’t you wish you made more than TEN TIMES more profit in the course of a decade?!?!
As an example, Delta’s 2016 $5.1 billion ancillary revenue sources included:
- Frequent Flyer Program/Co-Branded Card: 52%
- Economy Branded Fares: 20%
- Baggage Fees: 17%
- Comfort+ Seating: 6% (expect this number to increase substantially – they’re increasing the number of Comfort+ seats available and expect the popular up-sell to generate $300 million during the second half of 2017 alone)
- Other Activities: 4% (i.e. inflight WiFi, Priority boarding, SkyClub passes, etc.)
By the way, that $5.1 billion was 13.1% of its total revenue of $39.4 billion. I won’t suggest you think of that when all they offer you is a pack of Biscoff cookies and a watery soda on your next 3-hour flight.
Of course, each of us who’ve flown contributed to those profits in different ways and different amounts, based on priorities, availability, etc. But if you ever wanted proof the airlines are doing OK, well, look no further than IdeaWorksCompany’s report.
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