It’s been nearly three years since oil spiked to $150 a barrel, sending the airline industry into a death spiral. Delta Airlines says its annual fuel costs may rise by $1 billion in 2011 according to a memo yesterday to its employees.
“The biggest issue we face is the recent steep run-up in fuel prices” — Delta CFO Hank Halter
The airlines have learned how to withstand higher oil prices, and it’s by charging us novel and inspired ancillary fees.
Ever aware of the new economy paradigm in vacation travel, the industry is loathe to raise basic airfares. That won’t stop them from a slew of fees as oil prices continue to climb.
Ancillary fees must be reinvented
The industry stumbled upon the realization that they can make more money from fees than from flying.
Last year, airlines collected $22.6 billion in ancillary fees, up from $13.5 billion just a year earlier. One problem for the industry is that we’ve pretty well caught on to their fees and have learned how to mitigate them as much as possible.
Those charges include change fees, checked bag fees and paying for food. Ancillary fees will now need to be reinvented in order to create substantial new revenue.
The new fees I expect to see include:
1. Incremental baggage fees. Pay both by the pound as well as by the mile for checked and for carry-on bags. Also expect a penalty for not paying for bags in advance.
2. Lap-held infant fee.
3. Seating assignment fee. Pay extra to reserve any seat in advance or take your chances at the airport.
4. Credit card surcharge. Since these aren’t legal, it will probably be called a booking convenience fee, as is true with other online ticket purchases.
The widely rumored long shot: Premium Restroom Convenience Fee
If they could they would do it in a heartbeat. What about one free lavatory in economy with a long line, and the remaining lavatories available on a fee basis. The only issue is how to keep you from letting the next person in for free. That’s one I don’t have an answer for.
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