In 2011, no U.S. airline pulled in more revenues from fees than Delta. The airline collected an industry-leading $767 million in reservation cancellation and change fees, and another $863 million in baggage fees. Delta isn’t resting on its laurels, though. The carrier plans on charging passengers a whopping extra $1 billion in fees annually by 2014.
Delta isn’t known as the most fee-crazed airline. That title is probably split between Spirit Airlines in the U.S. and Ryanair in Europe—carriers that, infamously, charge for things such as carry-on bags and paying with a credit card not affiliated with the airline. Nonetheless, because Delta has a much bigger network of routes than Spirit, and because it charges a healthy number of fees, Delta collects the most total fee dollars of any U.S. airline.
In the third quarter of 2011, Delta took in $814 million in “ancillary fees,” which include charges for baggage, reservation changes, pet transportation, standby services, and anything else over and above the basic cost of an airline ticket. Delta’s ancillary fee revenues for that quarter surpassed the total generated by the next three airlines combined — American, U.S. Airways, and Southwest — with $300 million, $245 million, and $232 million, respectively.
Now, reports the Minneapolis Star-Tribune, Delta’s latest goal is to push the fee envelope further. Analysts say the Atlanta-based carrier, which merged with Minneapolis-based Northwest Airlines a few years ago, “plans to add $1 billion to its ancillary sales by 2014.” Delta hasn’t gone public with such an overt, off-putting money grab, though. Here instead is the airline’s best spin:
“What we really have a goal to do is to offer the customer exactly what they want,” said Glen Hauenstein, Delta’s executive vice president of network planning and revenue management. “So if they want a base fare with a seat and no checked baggage, we have a product for them. If they want free drinks, if they want food, if they want to sit in first class, we have a product for those folks, too.”
Of course, there’s no such thing as free drinks or food on board plans. Nor, for that matter, is there such a thing as “free” checked baggage. In one way or another—through fees or when factored into “bundled” flight prices—passengers pay up.
The line that Delta and other airlines are trying to walk is one in which fee revenues are increased at the same time that customers aren’t disgusted by the constant nickel-and-diming before and after boarding the plane.
One way Delta hopes to collect more in fees is by tempting customers with a free service. Passengers are allowed to shop at Amazon.com on Delta flights at no charge. Delta takes some portion of Amazon purchases made on board its plane, but the airline also hopes that once travelers get a taste of surfing the Web while flying, they’ll be more likely to pay up for non-restricted Wi-Fi on flights. Delta charges $12 for unlimited Internet on its planes during a 24-hour period, and monthly ($34.95) and annual passes ($399.95) are available as well.