Airlines are intensifying the use of extra charges to create new revenue streams by offering add-ons such as baggage, seat selection and in-flight services. However, travellers are feeling the strain of rising costs. While the aim is to keep base fares low, the increasing range of so-called optional fees now accounts for nearly 15% of passenger income for carriers, up from just 5% in 2010. This trend is beginning to impact the overall affordability of air travel.
The approach started with budget carriers like Jetstar, which introduced separate baggage fees in 2004. What began as a way to recover costs has developed into a complex strategy that turns nearly every part of the flight experience into a revenue opportunity. From onboard snacks and reclining seats to deciphering booking categories, flying on a budget now relies more on deciding which services to opt out of rather than what is included.
In 2023, global airlines generated an estimated $227 billion in ancillary revenue, which is nearly four times what was reported ten years ago. Checked baggage fees contributed $50 billion to this figure, with costs having risen far beyond the rate of inflation. Virgin Australia now charges as much as $110 for international baggage, nearly three times higher than in 2008. Qantas charges up to $80 per additional kilo on long-haul routes, compared to just $5 around fifteen years ago.
What began as a practice among low-cost carriers has spread to full-service airlines, many of which now charge passengers, including those in business class, hundreds of dollars for simple services like seat selection. International carriers such as British Airways and Qatar charge over $200 for certain premium seat choices, which blurs the distinction between budget and full-service expectations.
This shift highlights an industry-wide trend. Airlines are increasingly dependent on non-ticket income to stay competitive in a market where price sensitivity is high. While this allows them to advertise lower base fares, they recoup revenue through strategic add-ons. This approach can irritate customers, especially those unfamiliar with the system, who may not realise what is excluded from their fare until after booking.
