The gift that keeps on giving

By A.H. | TORONTO

EVER get the feeling you've been cheated? John Lydon asked the crowd that question at the end of the last concert performed by the original Sex Pistols, but it could perhaps be asked of today's air travellers as well. A study of more than 200 airlines by Amadeus, a company that provides technology to the travel industry, and IdeaWorks, a consulting organisation, reveals that carriers are expected to collect $32.5 billion in ancillary fees this year, for everything from baggage and onboard meals to advertising revenue. This represents a 44% increase on 2010's figure—and some travel advocates are wondering where the fees are heading. "Certainly, a lot of passengers are concerned about the cost of taking multiple bags," said David Jeanes of Transport Action Canada. "It's also somewhat unfair because it's a price per bag, rather than price per weight and for older people... who might be travelling with smaller bags so they can handle them... that's a concern."

North American carriers started pursuing ancillary revenues after oil prices soared in 2008, and have continued the practice ever since. And with spending on jet fuel across the world expected to rise by $10 billion from 2010 to 2011, ancillaries are helping keep North American airlines afloat—to the tune of $15 billion this year. "As ancillary revenues continue to grow rapidly, we are now seeing increasing interest from full service carriers around the world, which are starting to implement ancillary services through global distribution systems," said Holger Taubmann, vice-president of distribution at Amadeus.

The massive increase in fee-based revenues may not be as startling as it appears, though. IdeaWorks reckons almost half of the $9.9 billion rise can be chalked up to an increase in flyers and general revenues, with the rest of the increase split between better financial disclosure, stronger merchandising efforts and the sale of more services. The ubiquity of ancillary services is also dependent on the airline you're flying. Those charging the most fees, such as AirAsia, AerLingus and Ryanair ("Ancillary Revenue Champs", in the report's parlance), get 19.8% of their operating revenue from fees. The equivalent figure for the big seven American airlines is 11.9%, while low-cost carriers worldwide get 6.5%. At the bottom, traditional airlines such as Air China, Emirates and Singapore Airlines get an average of 2.9%, the same as last year. No matter what business model airlines choose, ancillary fees are here to stay: at least you don't always have to pay them.