Airlines' New Reality: Fees for Carry-Ons, Pillows, Water, Once Included, Now New Revenue
By the end of your trip, you could have spent upwards of an additional $100.
May 24, 2012— -- The doors to a Boeing 777 used to be the gateway to adventure. Now when you get on a plane, it's more like the moment of truth -- for your wallet.
The airlines are adding on fees for almost everything, including amenities that were once complimentary. So just how much is that flight you thought you paid for already really going to cost you? By the end of your trip, you could spend hundreds more than you expected to.
Delta and other airlines are now charging around $6 to watch an in-flight movie. Spirit Airways charges $3 for a bottle of water. Allegiant Air charges between $4.99 and $24.99 for passengers to choose their own seat and between $17 and $25 for a pillow and a blanket. And just last month, Allegiant announced it will start charging between $10 and $30 for passengers to have the privilege of storing carry-on bags in the overhead compartments.
But that cost is not quite has high as Spirit's carry-on price of $20 to $40 -- and it has been charging for carry-on bags since 2010. So which airline is going to be next?
"We're probably a few years away from other airlines following what Allegiant has done, but honestly, we're probably not that far off," said Sean Williams of Motley Fool, a financial services company. "I think a lot of the airlines aren't going to have much of a choice to do this. Many of them are losing money hand-over-fist if these fees aren't there."
A key reason people started to switch to carry-on was to avoid baggage charges that have also crept up in price in recent years. All you want to do is bring your clothing, but on United passengers will pay $100 for a third checked bag on an overseas flight, while Delta is charging $135 and American Airlines is charging $150.
Lately there is even the "book your seat" fee, an extra per seat charge at the time of booking on some section of some airlines to avoid the middle seat, or just to make sure you and your spouse are sitting next to each other.
In total, the airline industry brought in $2.6 billion in revenue during the first three-quarters of 2011 through these add-on fees. Williams said Delta has brought in $656 million in just baggage fee revenue alone.
"They also are the leading airline when it comes to change-ticket fees," he said.
But these fees really diminish the idea of any discount the airlines are offering these days.
For example, a round trip from New York to London on US Airways for a flight that leaves in November, purchased now well in advance, offers a decent discount fare price at $658, with limited flexibility.
But add two suitcases, and that price goes up to $70 each way. Add a third suitcase, and that's an additional $200. Add the $236 tax on the ticket, which US Airways doesn't get to keep and the total price of that $658 ticket is now up to $1,434.
This seems bad for business, so why do the airlines do it?
"[The airlines] have no choice but to put out all these extra fees because they'd be losing money otherwise," Williams said. "Between the added cost of planes, which just continue to be more expensive... they really have no choice."
One of the greatest costs to the airlines is the price of fuel. Delta has considered buying their own refinery so that the airline can make its own fuel.
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