United Comes Up With New Fee Plan
CHICAGO (
) -- As airlines rely increasingly on fee revenue,
United
(UAUA)
has devised a new method to package charges for amenities such as early boarding, more legroom and bag checking.
United has been a leader in the airline industry's move to ancillary fees, which it expects will add $1.1 billion to its 2009 revenue. The world's third largest carrier said Tuesday that it will bundle amenities in two branded packages, offered at its top 70 domestic airports.
With Premier Travel, passengers can check two standard bags, use branded lines for security checkpoints and boarding, sit in seats with extra legroom and earn 25% more frequent flier miles. The Premier Travel Plus package provides similar benefits as well as access to United Red Carpet Clubs in 15 domestic airports and double frequent flier miles.
By purchasing bundled options, passengers can save up to 50%, a United spokesman said. Prices start at $47 for Premier Travel between Washington and New York/Newark; Premier Travel Plus costs $84 in the same market. Charges are slightly higher between Los Angeles and San Francisco.
Internationally, between Chicago and London, Premier Travel is $158, while Premier Travel Plus is $285: charges are slightly higher between San Francisco and Tokyo.
A recent report by consulting firm IdeaWorks says that ancillary fees enhanced worldwide airline revenues by $10.25 billion in 2008, up from $2.29 billion in 2006. "Ancillary revenue and a la carte pricing became commonplace in travel during 2008 when major airlines throughout the world started charging fees for checked baggage, premium seating, soft drinks and more," the company said. "The sickly patient known as the world's airline industry suffered through 2008 and only survived due to dramatic schedule cutbacks, the slow reversal of fuel prices, and an 'intravenous injection' of ancillary revenue."
Delta
(DAL) - Get Report
, the largest carrier, said ancillary revenue grew by 15% or $123 million in the second quarter to $924 million. CEO Ed Bastian has said revenue from services and credit card fees will add $2 billion in 2009 revenue.
US Airways
(LCC)
has said it expects about $500 million in 2009 fee revenue.
-- Written by Ted Reed in Charlotte, N.C.
.
