US baggage fee revenue down, up at LCCs

Washington DC
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Revenue from baggage fees rose significantly at US low-cost airlines in 2011 with Miramar, Florida-based Spirit Airlines leading the pack with a 64% jump compared to 2010, while it fell nationally.

Overall revenue collected by US airlines was down 1% to $3.36 billion in 2011 compared to $3.395 billion in a year earlier, according to US Bureau of Transportation statistics data.

Baggage fees have become significant revenue generators for airlines since they began unbundling ancillary services from ticket prices during the last decade. For example, Tempe, Arizona-based US Airways generated $537 million in these revenues last year that accounted for nearly half of the airline's $1.1 billion in passenger revenue.

Spirit collected nearly $134 million in 2011 compared to $81.5 million a year earlier. The jump was driven largely by a 15.2% increase in passenger capacity during the period and it being the first full year of the airline's carry-on bag fee, which was implemented on 1 August 2010.

Checked baggage fee revenues at Southwest Airlines and subsidiary AirTran Airways were up 8% year-on-year at $197 million in 2011, which was the largest amount generated among US low-cost carriers.

Fee revenues at JetBlue Airways were up 12% year-over-year at $64.1 million during the period, Frontier Airlines was down 32% at $54.9 million, Allegiant Airlines was down 3% at $53.6 million, Virgin America was down 7% at $33.5 million and Sun Country Airlines was up 10% at $13.4 million.

Major airlines generated fewer baggage fees for the most part in 2011. A decrease in these revenues at Delta Air Lines, United Airlines and US Airways - three of the nations largest airlines - helped drive the overall drop in the amount of fees collected during the year. American Airlines and smaller legacies Alaska Airlines and Hawaiian Airlines all saw these revenues rise.

Delta collected the most in baggage fees of any US airlines with $863.6 million in 2011, which was down 9% year-on-year.

United was down 4% with $630.2 million in baggage fee revenue during the period, American was up 2% with $594 million, US Airways was down 1% with $506 million, Alaska was up 24% with $157 million and Hawaiian was up 5% with $56.6 million.