Fees for Everything: Airlines Rake In Big Bucks From 'Extras'

Passengers likely will see new, more creative airline fees.

Passengers check in at Delta Airlines for flights out of O'Hare International Airport on October 24, 2012 in Chicago, Illinois. Delta Airlines Inc. said its third-quarter profit nearly doubled due in part to a large drop in the airlines fuel costs.
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Plan on carrying on your jacket with you on your next flight? Soon it could cost extra, thanks to all the money airlines are making on fees for everything from checked luggage to priority boarding privileges.

This year, revenue from airline fees will reach a record high $36.1 billion according to a study from consulting firm IdeaWorksCompany, which analyzed data from 176 carriers around the world. That's more than 11 percent higher than the total of about $32.5 billion recorded in 2011, and about 40 percent higher than fees airlines brought in two years ago.

According to the study, the growing revenue from fees presents "significant commercial potential for airlines," and with the operating environment still challenging, extra fees are increasingly attractive and in many cases crucial for carriers all over the world.

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But seeing as airlines have already charged for virtually every "extra" that used to be free, carriers are having to become increasingly creative with the new fees they come up with to boost their bottom lines.

"Airlines have just about exhausted the fees they can introduce for services they used to offer for free, such as choosing seats and getting a snack on board," a recent USA Today article reported. "They're becoming retailers by devising new services and products to sell."

Recently that's meant carriers rejiggering aircraft layouts to accommodate roomier seats for which they can charge a premium fare. Others have turned to charging passengers penalties for opting for a customer service agent at the airport instead of an electronic kiosk. Upgrading or selecting a seat will also cost you with some carriers.

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American Airlines has even taken to offering services for a fee after the plane has landed. Depending on how many bags you have, the carrier will deliver your luggage to your local destination within four hours of arrival for $29.95 to $49.95.

Even with projections for airline profitability being revised up from $1.1 billion for 2012 to an expected total of $4.1 billion, according to the International Air Transport Association, passengers aren't likely to get a break from fees anytime soon. According to TIME, it's actually the most fee-crazy airlines, such as Spirit and Europe-based Ryanair, that have been the most profitable in recent years while those that have continued to offer freebies, such as Virgin America, have languished.

While a full-scale passenger revolt against fees hasn't materialized, airlines are cognizant of the fact that tacking on extra charges needs to be done tactfully.And even though consumers might be feeling a bit nickel-and-dimed with what seems like a new, more inventive airline fee every week, the pace of fee increase won't like be as steep as they have been in the past.

The industry is trying to "push the limits until they find out what they are," Aaron Gellman, professor of transportation at Northwestern University's Kellogg School of Management, told USA Today. "How far can they do it before there's a rebellion?"

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Meg Handley is a reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter at @mmhandley.