JetBlue raised its checked baggage fee from $25 to $30 in August 2018. Within weeks, all other U.S. based carriers (with the exception of Southwest) followed suit. Airlines have become more and more reliant on these fees, and others, which the industry calls ancillary fees. In fact, the global revenue generated from ancillaries was expected to be nearly $93 billion last year, a whopping 312% increase from 2010.
Ancillary fees are commonly among the top passenger complaints. Passenger consternation with fees has gotten so bad in recent years, that lawmakers began voicing concerns - sending letters to U.S. airlines questioning the decision to increase fees. But, in the current environment of “unbundled fares” - the term used to describe the practice of separating the ticket prices from additional services - how does today’s airfare environment compare to historical prices?
According to the Bureau of Transportation Statistics, the average fare in 2018, not including ancillary fees, was $346. Adjusting for inflation, 2018 was the least expensive year to fly since 1995. Average airfare in 1995 (reported in 2018 dollars) was $480.
Yes, an airline ticket in 1995 didn’t have ancillary fees, so lets explore that. Checked bags were free, meals were complimentary (but, aside from international first or business class, when was the last time you heard someone rave about plane food?), and seat assignments didn’t cost extra. However, inflight entertainment was limited to longer flights, and was a predetermined movie based on the direction of the flight. Eastbound you get Toy Story. Westbound you get Waterworld. “But I don’t want to watch Waterworld, I want something else.” First of all, no one wants to watch Waterworld. Secondly, tough, that’s what is playing, and it’s on a tiny shared screen several rows in front.
Assume, now, that a passenger in 2018 paid the average fare of $346, how does that compare to 1995? Tack on a checked bag each way ($60 round trip), and a $25 meal at the airport in each direction to make up for a lack of food on board. That’s $456 total, or $24 less than the cost of a ticket in 1995.
I would also argue that the travel experience is better today than it was in 1995, despite the tighter squeeze in economy. Most airlines are installing new seats, that while passengers claim aren’t as comfortable, usually feature 110V power outlets, USB charging ports, adjustable headrests, and in many cases seat-back entertainment. All of the major airlines in the U.S. now offer complimentary streaming content to your personal devices, with a plethora of content. WiFi is being proliferated across fleets and is pretty much an industry standard. JetBlue already offers FREE WiFi and Delta’s CEO, Ed Bastion, just doubled down on a comment from last year saying, “Our goal is to make Wi-Fi free with high speed quality. It will take another year or two to make that happen.”
Airlines have also rolled out premium economy products en-masse and have completely upgraded international first class products, where flat-bed seats are now the industry standard. Additionally, airlines are pumping billions of dollars of investment in updating aging airport infrastructure across the country.
Say what you want about today’s passenger experience, but I believe it is better than it was 10, 15, 20 years ago. And despite ancillary fees, it is no more expensive.