You might be surprised by the ancillary fee that's boosting airlines' bottom lines.
If you had to guess the fastest growing and highly lucrative U.S. airline ancillary fee the first thing that comes to mind would probably be baggage fees, a hot-button issue well-covered by the media. But the Bureau of Transportation Statistics published some interesting airline revenue numbers for Q4 2013 and the entire year, and the new darlings of ancillary fees are ticket change fees.
Although baggage fees still made up 1.6% of airlines' total operating revenue in the fourth quarter of 2013, they declined over 3%. Ticket change fee revenue, however, increased 10% year-over-year for Q4. They brought in $647 million in Q4 2013, and made up 1.4% of airlines' operating revenue. For 2013 as a whole, ticket change fee revenue increased 11%, and totaled $2.8 billion.
Airlines might be taking a hit on baggage fees, but they're certainly making up for it with ticket change fees. Two of the airlines reporting the biggest declines in baggage fees also appeared on the list of airlines with the largest increases in change fee revenues - Alaska and Delta. In fact, starting on the first day of Q4 2013, Alaska raised their ticket change fee from $75 to $125. For U.S. carriers flying domestic routes, a $200 ticket change fee is closer to the norm. On international flights, it could be upwards of $400.
While travelers have found ways around baggage fees by packing lighter or using an airline reward credit card to avoid the charges, ticket change fees are harder to sidestep. Industry analysts cite an increase in business travel demand as a driver of the increased ticket fee revenue, as those travelers are more likely to need more flexible traveling plans than leisure travelers.
Want more info on airline fees? Smarter Travel put together a handy chart of fees by airline.