Get Ready For "Rebundling"

You may have wondered, when it comes to a la carte fees on airline flights... what could be left? That's a question you might wish we didn't ask.

Airlines seem to have found just about every service we've taken for granted for years, broken it out as a separate fee, and now they're raising the fees. As ANN reported Tuesday, United Airlines recently raised its fee for pets in the cabin to $350, and charges $500 for pets in the cargo hold.

As fuel prices have plummeted in recent months, all that ancillary revenue has been a windfall for some airlines. American Airlines saw its secondary revenue skyrocket 60 percent in 2008, to $2.1 billion, over 2002 levels. That's entirely due to such unpopular new charges as $15 to check a single bag.

"That's been a pretty big success story," AMR Chief Financial Officer Tom Horton told Reuters.

As the carriers approach what may be the theoretical limit of what travellers will put up with, Business Travel Coalition Chairman Kevin Mitchell tells Reuters the next tactic by cash-strapped airlines will be selling you things you never thought about buying on an airplane.

"They're going to use the cabin for all manner of merchandising... You have a captive audience," Mitchell said.

Airline Consultant Andrew Watterson calls it "rebundling." That means we'll see more high-quality meals, day passes to airport lounges and the option to purchase frequent flyer miles, if people want to spend the extra money.

"Unbundling was the trend, and that did create lots of value in the airlines," he said. "The future is in rebundling."

FMI: www.aa.com, www.united.com