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February 24, 2024
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Airlines have embraced ancillary fees as a way to make up for low fares. One of those fees was the “Reservation Cancellation/Change Fee”.  Air travel is an activity that comes with many disruptive factors, as anyone can testify.  The US airlines embraced a series of fees. Take a look at how popular this fee has become.

2016-10-06_9-16-46In 2007 this fee generated the the industry with $1bn in extra revenue.  But because people face regular travel interruptions, airlines started to rake in cash from this fee.  By 2015 the industry had tripled their revenue to over $3bn per year.

Which are the airlines making the biggest fees from this ancillary charge? No surprises.  US Airways and American have merged, which when added together would make American the largest beneficiary among the US carriers.  Delta started slowly, but merging with Northwest (an early pioneer of the fee and the top earner in 2007 & 2008) pushed it up the list quickly.  United was another pioneer and we see it has become a strong proponent of the fee.

2016-10-06_9-21-52The most noteworthy missing brand here is Southwest.  The table below shows the latest DoT numbers for 2016, with airlines ranked by reservation cancellation/change fee revenue, and dollars in thousands.  Still no Southwest.  Which is amazing given that the airline is so large.

2016-10-06_9-28-45Its not like business is off in any way, as the next chart illustrates.  the opportunity is surely there for Southwest to also make additional revenue from this fee.

load_factorAccording the latest DoT data, Southwest ranks #1 for passengers and departures for 2016, and #2 for RPMs and ASMs.  Southwest is a big airline, with 715 aircraft.  They have to stumble as much as anyone in the variable airline business. But investors love the company and employees love the company, too.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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