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Passenger fees take off in Europe

June 09, 2013|By Hugo Martin

The era of passenger fees — charges for checked bags, seat upgrades and onboard food — began to take hold in the U.S. when airlines tried to offset their losses from surging fuel prices in 2008.

Now, with Europe in the grip of its longest recession in decades, the trend of charging passengers for such extras is taking off with full-service airlines across the pond.

Taken together, 53 of the world’s major airlines collected $27.1 billion in passenger fees and other charges in 2012, up 19% compared with the $22.6 billion raised in 2011 by 50 airlines, according to a new report by IdeaWorks, a Shorewood, Wis., airline consulting firm.

A bigger share of those fees are coming from major European airlines, which have struggled with Europe’s economic slump and stiff competition from low-cost airlines that have reaped hefty revenues from passenger fees for years.

The Dutch airline KLM became the first full-service European carrier to charge bag fees in April. Members of the airline’s loyalty program are exempted from the fees.

Air France and KLM, which are owned by the same French holding company, jumped onto the list of the world’s top 10 generators of passenger fees for the first time this year, ranking seventh by collecting $1.2 billion, according to the IdeaWorks report. The two airlines did not publicly release ancillary fee information last year.

In addition, German-based Lufthansa turned over most of its short-haul flights that don’t serve major hubs to its low-cost subsidiary, Germanwings, which charges for checked bags, seat assignments and food and drinks.

British Airways now offers airfares with or without baggage fees included.

“I think this is going to open the floodgates in the next few years for this to be a long-haul phenomenon,” said Jay Sorensen, president of IdeaWorks


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