Southwest Airlines brags nonstop about its bags-fly-free policy and lack of ticket change fees, policies that drive passengers to the airline in droves.
What the airline doesn’t trumpet: It’s doing just fine on the fee front thanks to other passenger charges, most notably priority boarding fees.
The tally for 2018 is in, and Southwest collected $642 million in passenger fees last year, the airline disclosed in a regulatory filing this week. That’s up 13 percent from $566 million in 2017.
Airlines have long had to disclose baggage fee and ticket change revenue to the U.S. Department of Transportation, but accounting rules now require them to also provide a total figure for passenger fees in regulatory filings instead of lumping them into a broader category called “other” revenue. Southwest is the first to report annual figures, in its 10-K filing with the Securities and Exchange Commission this week.
The so-called passenger ancillary revenue category includes a range of fees such as in-flight Wi-Fi and alcoholic beverages, pet fees, unaccompanied minor fees and baggage fees of all sorts, but the the biggest source of fee revenue for Southwest is its 10-year-old EarlyBird Check-In option.
For $15, $20 or $25 one way per person depending on the route, passengers who buy EarlyBird Check-In get a higher position in Southwest’s boarding line. Boarding order is critical on Southwest because the airline famously doesn’t assign seats. Passengers are free to pick any open seat when they board.
Southwest didn’t break out the total for EarlyBird check-in fees in 2018, but it did in 2017 and that year the fees totaled $358 million, or 63 percent of the total passenger fee revenue.
Southwest President Tom Nealon said in January that EarlyBird revenue and another priority boarding option called Upgraded Boarding each grew by double-digit percentages in 2018. Using a conservative 10 percent year-over-year gain, that puts EarlyBird revenue approaching $400 million for 2018.
Southwest used to charge a flat $15 fee each way for EarlyBird Check-In, but switched to variable pricing in August. (The fee started at a flat $10 in 2009.)
“We’re making this change so we can continue offering a product our customers love,” Southwest said in a statement at the time. “Of course, an increase in the price of a product is rarely welcome news, but as EarlyBird increases in popularity, we want to protect the value it offers our customers.”
A USA TODAY spot check of flights found that the EarlyBird fee on many routes went up.
Nealon said in January that the airline has been pleased with the results from the switch to variable pricing.
Southwest also increased its Upgraded Boarding fee in 2018. That option, which guarantees travelers a spot at the front of the line, is available on select flights and is $30, $40 or $50 each way at the gate. Southwest has not publicly disclosed Upgraded Boarding revenue.
Southwest’s EarlyBird and Upgraded Boarding fees are essentially seat selection fees, which have become common at other carriers and are an increasing source of frustration for travelers.
Without charging for the first two checked bags, Southwest still lags its competitors on the fee front, of course. American Airlines, for example, collected $911 million in baggage fees in the first nine months of 2018 alone, according to the Bureau of Transportation Statistics. And United’s baggage fee take in that period was roughly equal to Southwest’s total passenger fees for the year.
Read or Share this story: https://www.usatoday.com/story/travel/flights/2019/02/07/southwest-airlines-collected-642-million-fees-last-year-earlybird-check-in-bags-fly-free/2795979002/