Low-Cost Carriers Consider Meals, Other Non-Ticket Revenue

Southwest CEO Gary Kelly says the airline is sticking to its no-hidden-fees mantra. But the carrier would consider charging for extra services through its website. Southwest is looking to increase revenue by charging for items such as onboard Wi-Fi, and possibly in-flight food.

AirTran and JetBlue also are on a hunt for new revenue sources and new strategies. AirTran CFO Arne Haak estimated the airline would collect $300 million in ancillary revenue in 2009. Baggage fees have accounted for the biggest revenue increase, he said.

JetBlue CEO David Barger said extra fees will produce an additional $60 million this year in revenue. Like Southwest, the airline is also thinking about going beyond complimentary snacks by selling meals on some longer flights.

Haak also said that AirTran is looking to forge more codeshares or enter into an alliance, and he would not discount a partnership with either Southwest or JetBlue. Likewise, JetBlue is looking to broaden its horizons, possibly by leveraging its relationship with Star Alliance member Lufthansa, which holds a minority stake in JetBlue.

By cooperating with Lufthansa, JetBlue would boost international traffic flow in key markets such as New York, Boston and Orlando, he said. One business mind-set that won’t change for these airlines, though, is their focus on low costs.