Don't Let The Bad Economy Get You Down!
Nov 5, 2009 12:09 pm US/Eastern
AirTran Looks For More Profits With More Fees
ATLANTA, GA (CBS4) ―
AirTran could be banking on a customer's focus on fare prices first and foremost as they study more possible fees in the future.
Chief Financial Officer Arne Haak told an investor conference Thursday that customers want the cheapest fare when they buy their tickets, but seem willing to shell out extra money for fees as they go through the travel process.
AirTran Airways sees opportunities in the future to increase revenue from add-on fees, like seat assignments ahead of time, the company charges. Checked bag fees have already been a boon for airlines.
Despite being a discount carrier, AirTran is one of the few profitable major U.S. airlines. AirTran has benefited by having low costs and focusing on profitable domestic routes. Recently, it also has been adding service to the Caribbean.
The Orlando-based discount carrier expects to make $340 million this year in ancillary revenue, including revenue from add-on fees. That would be a 45 percent jump from 2008.
Last month its parent company reported a $10.4 million third-quarter profit, even though sales declined more than 11 percent. That marked AirTran's third quarter in a row of profit as most major U.S. carriers struggle amid weak overall demand for business and international travel.
Haak said the economic outlook remains uncertain, and he noted that fuel prices are on the rise again. But he said so-called ancillary revenues are "very good for AirTran and low-cost carriers." He said add-on fees "are really here to stay."
Haak said consumers are very competitive when they make their initial decision to buy a ticket, but seem more likely to spend money as their trip goes along.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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