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Those little extras add up

Tuesday, July 24, 2012

Hear that "drip, drip, drip?"

That's your money being slowly, surely and stealthily siphoned away from your wallet.

Sometimes you realize it, sometimes you don't.

Product companies, airlines, hotels, service businesses all have been finding "creative" ways to separate the consumer from his or her cash.

Sometimes we barely notice - the pound of coffee that isn't quite a pound.

The extra "air" in your Cheerios box.

The gratuity already included in your bill, but not noted to the customer when the bill is presented at some restaurants, resulting in a double service payment. All ways to get more from the customer, without the bad publicity of a rate hike.

Sometimes we pay with less service. "Complimentary" isn't so complimentary anymore many times.

The most obvious and well-publicized is the airline industry. The good old days when flying was a fun experience have been replaced, for the most part, with a plod through Dante's rings when attempting to get from Point A to Point B. More passengers, more tightly packed, with less service. The listed fares may be the same as a year or two ago, but your actual outlay in cash is generally significantly more.

You've got checked bag fees, a fee for headphones to listen to music or video in-flight, no free lunch, forget about a pillow and blanket without whipping out your credit card....the list goes on and on.

In a report released on Monday, the consumer gets a look at just how important those "ancillary revenues" are to airlines.

Globally, airlines reaped $22.6 billion in ancillary revenue in 2011. At $25 for a checked bag, $10 for priority seating, and $10 for a sandwich, that represents a lot of people paying a lot for what used to be free.

Topping the list was United Continental, with revenues of $5.2 billion, double that of the next highest ancillary charger, Delta, which scored $2.5 billion.

Southwest, famous for its "bags fly free" mantra, cracked the top 10 list in 2011, thanks to its "priority booking" fee of $10. This allows customers to log in early to get to the head of the line for the airlines "open seating" cattle call.

I fly Southwest a lot and I've never taken advantage of the early booking perk, believing that the back of the plane arrives at its destination at close enough to the same time as the front for me. Folks with families who want to ensure they sit together, or those who get a bit seasick in the back probably find $10 to be pretty cheap insurance for a more pleasant flight.

Low cost carriers, like Spirit, Allegiant and Ryanair, dominated the results when fees were calculated as a percentage of their total revenue. Spirit picks up a third of its total revenue through fees. In some cases at these super-low-cost airlines, even your carry-on bags are charged an extra fee.

With that kind of revenue going right to the bottom line, it's doubtful airlines will back away from this "add-on" strategy any time soon. In fact, now that the low-hanging fruit of fees has been picked, we'll be seeing even more ingenious ways of separating the customer from his or her cash.

When we have to pay more for sitting inside the plane instead of on the wing, I'll know it's time to start investigating train travel.



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Paula Buenger
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