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business newsAirlines to Passengers: We Have Not Yet Begun to Gouge You
By
Scott Reeves Mar 23, 2009 1:45 pm
Brief scrutiny of today's headlines.
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But that probably won’t stop airlines from offering new fee-based services in an effort to boost revenue, such as better meals, day passes to special waiting lounges at the airport, or even the ability to purchase frequent flyer miles.
Last year, record high fuel prices forced carriers to find additional sources of revenue. Many airlines quickly added fees to check a bag, to secure a prime seat assignment and even charged for routine things such as a pillow and a blanket. Such fees appear to be more or less permanent.
Major airlines, including American (AMR) and United (UAUA), now charge to check a bag, but US Airways (LCC) backed off a fee for in-flight soft drinks after customers complained - and the competition failed to follow its lead.
Ryanair (RYAAY), Europe’s largest budget carrier, has talked about charging a pay per pee fee while in flight, but so far hasn’t imposed it.
The new fees for formerly free services appear to be a smart move for airlines. Reuters reports that American Airlines boosted its ancillary revenue to $2.1 billion in 2008 from $1.3 billion in 2002, an increase of 61.5%.
The friendly skies? Sure - but a smile will cost you.
No positions in stocks mentioned.
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