Airlines see increased profit from customer fees

You know who likes all the fees airlines charge? Customers do, one airline industry analyst contends, and he has an idea for a bunch of new ones.

Revenue from all those airline fees and services, called ancillary revenue, rose 7.1 percent in 2014, industry analyst Hunter Keay of Wolfe Research said in a report Friday. Such revenue has helped airlines become profitable in recent years, along with a recent, sharp drop in jet fuel prices.

Ancillary revenue comes from fees for checked bags, extra legroom and flight changes, for example. Keay wrote in a report Friday it might be an “inconvenient truth,” but customers like fees.

“Maybe that sentence would be better received if we had said ‘customers like paying only for what they use.’ Well, guess what? That’s the same thing,” he wrote.

Survey results in recent years beg to differ – showing customers hate those fees.

Keay said the “mother lode” of fees is still untried among most airlines: charging customers for carry-on bags if they book through an online travel agency, such as Expedia, Priceline or Orbitz, rather than directly with the airline.

“That isn’t just about revenue – it’s also about lowering distribution costs. And it clears up more bin space for good customers (those with status) at the expense of bad customers,” he wrote.

A few discount airlines already charge all customers for carry-on bags that need to be stored in the overhead.

And, of course, one that’s often joked about: charging to use the bathroom.

“Just kidding, although the idea of giving away free booze and charging customers $20 to use the restroom is fun to think about,” Keay wrote.

Fun, in a stock analyst kind of way.