ATLANTA — Fees for checked bags, reservation changes and other services are a bane to fliers these days, but they have become a significant source of airlines’ revenue.
Atlanta-based Delta Air Lines had the highest “ancillary revenues” per passenger in the third quarter among major airlines ranked in a federal report. The airline brought in $24 per passenger in such revenue, the U.S. Bureau of Transportation Statistics report says.
That was 20 percent more than the next-closest airline, Delta merger partner Northwest Airlines, whose numbers were reported separately. And it was twice as much per passenger as fellow airlines American and United.
AirTran Airways, meanwhile, collected only $10 per passenger from such sources, but that money accounted for 11.4 percent of its operating revenue - the highest in the industry. Delta was second at 9.3 percent.
The revenue measured in the federal report includes baggage fees, reservation change fees, pet transportation fees and standby passenger fees.
It also includes proceeds from the sale of frequentflier award miles to marketing partners, which can vary significantly between airlines and might help explain Delta’s wide lead over other carriers.
Delta sells miles to its credit-card partner American Express and other partners monthly.
Delta’s total ancillary revenue in the third quarter was $447.5 million, compared with $261.2 million at American, $230.8 million at USAirways and $223.2 million at Northwest.
The industry got 6.9 percent of operating revenue from those sources, up from 4.1 percent in the third quarter of 2008.
Among the 10 airlines ranked, Delta had the highest total collections of baggage fees and miscellaneous operating revenue, includingpet fees, standby passenger fees and sales of miles to business partners. Delta had the second-highest total for reservation change fees, behind American.
But on a per-passenger basis, the amount Delta collected for baggage and change fees was in the middle of the pack.
Some of Delta’s fees areon the high end relative to the industry. While Delta and United charge $175 for oversized bags, for example, American charges $150 and US Airways charges $100. AirTran charges $79.
“The entire industry has moved toward these a la carte fees, and Delta has remained competitive with other carriers,” Delta spokesman SusanChana Elliott said.
The fees have been criticized by some passengers and travel experts as “nickeland-diming” customers.
But Delta and other airlines have been losing money and have been searching for ways to boost revenue. At Delta’s investor day last week, Delta President Ed Bastian said “we’re going to stay the course with respect to our ancillary revenues,” adding that the company had a $500 million improvement in revenue this year from “unbundling” of ticket prices.
Elliott said Delta’s “most loyal customers do not incur these fees, as they typically apply to customers that choose to fly Delta on a less consistent basis.”
For example, Delta’s elite frequent fliers don’t pay fees to check up to two bags, while other passengers pay at least $15 for the first checked bag and $25 for the second bag on domestic flights.
The third-quarter fee and mileage sale revenue per passenger, according to the Bureau of Transportation Statistics, were:
Delta: $24
US Airways: $18
American: $12
Northwest: $11
Continental: $11
Alaska: $11
AirTran: $10
JetBlue: $8
Southwest: $6
Business, Pages 79 on 12/20/2009