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WestJet the latest airline to hike baggage fees amid sky-high jet fuel prices

April 23, 2026

Canadian Press

“How does an airline compensate itself for the losses that are occurring for the first quarter and the second quarter and maybe even the third quarter this year? Fares are not going to track the price of oil, because there is this residual loss that has to be accounted for,” said Jay Sorensen, president of consulting firm IdeaWorksCompany.

For now, the ballooning price of kerosene-based fuel — the oil derivative that powers planes — means older, less energy-efficient aircraft and routes with thinner earnings need to be axed, he said. That carriers have opted to park many planes in storage — Lufthansa cancelled 20,000 summer flights this week — points to how dire the situation is.

“When an airline grounds an airplane or cuts back flights, that’s an indicator of true financial pain, because this is a business that thrives on increasing activity over a fixed-cost base,” Sorensen said.

“It’s going to be a horrible year for the airline industry.”

United’s CEO Is Here to Buy Your Struggling Airline

April 23, 2026

Scott Kirby wants to run “the unequivocal best airline in history.” Will merger talk, spiking fuel prices and turf wars get in the way?

For all the accolades Kirby gets, though, in some ways he’s followed the lead of Delta Air Lines Inc., which pioneered present-day premium air travel in the US and remains the leader. Delta’s revenue last year was $63 billion, compared with United’s $59 billion. Bloomberg data shows Delta had a profit margin of about 8%; United’s was more than 2 percentage points lower. Even so, through late April, United’s shares had outperformed Delta’s since Kirby was promoted to chief executive officer in May 2020.

“United is just running a hell of an airline right now,” says Jay Sorensen, president of IdeaWorksCompany, an industry consulting firm. “As much as I hate to stroke the ego of Scott Kirby, I would place a tremendous amount of emphasis on his leadership.”

First-Class Seats Drive Airline Profits. It Wasn’t Always This Way

April 10, 2026

New York Times

Historically, tickets were often sold by travel agencies or websites like Expedia, where customers typically shopped on price alone. That made it difficult for airlines to persuade customers to spend more. So carriers spent years increasing direct sales.

By controlling the booking process on their own websites, airlines could offer fares that included perks like free checked bags or priority boarding. Such bundles have been a huge success, said Jay Sorensen, who runs IdeaWorksCompany, a consulting firm that works for airlines and other aviation businesses.

“Direct online selling enabled airlines to be far more creative than they could be in the past in how they present their products,” Mr. Sorensen said.

Free hand luggage for everyone – but who’s going to pay for it?

March 16, 2026

Handelsblatt

Jay Sorensen, CEO of IdeaworksCompany, raises another point: “Low-cost carriers set the price floor. If they raise their prices, traditional airlines will be pleased and raise their prices as well.” The EU Parliament’s consumer-friendly initiative could therefore lead to higher prices for all passengers, which could also reduce demand for air travel.

Increased hand luggage allowances also cause further problems for airlines. This is because the fleets of low-cost carriers usually consist of narrow-body aircraft such as the Airbus A320 or the Boeing 737. “Such a plane has about 120 seats, but only space for 70 to 80 hand luggage suitcases,” explains Sorensen.

Will Europe’s planned luggage rules kill the budget airline business model?

January 31, 2026

Financial Times

Jay Sorensen, an expert on airline charges who runs the IdeaWorks consultancy, warned that such a move would “mess with the income mechanics of a low-cost carrier” resulting in higher fares.

He estimates European-based airlines collected $16bn in bag fees last year, with around 60 per cent going to low-cost carriers. While bag fees are not normally broken out, wrapped in with “ancillary” charges alongside food sales and seat bookings, Sorensen estimates they contribute to just under a fifth of total revenues for budget airlines.

The billion-dollar business behind your airline luggage fees

January 26, 2026

The Times Sunday – London

These extras, which include things like seat selection, priority boarding and baggage, are what airlines call “ancillary revenue” and they are making carriers a packet.

In November the American aviation consultancy IdeaWorksCompany forecast that airlines globally generated $157 billion (£116 billion) in ancillary revenue in 2025, up from $148.4 billion the year before and $67.4 billion in 2016, thanks to an increase in the number of passengers and the rise in economy fares among the premium carriers that pay for the seat only.

United Airlines’ 2025 Results Soar Past Expectations

January 20, 2026

Barron’s

As for President Donald Trump’s proposed 10% cap on credit card rates, from which airlines generate billions in revenue from co-branded credit cards, they may not materialize.

Jay Sorensen, founder and CEO of IdeaWorksCompany, a consulting firm that analyzes ancillary revenue such as airlines’ loyalty marketing, doesn’t expect the proposed 10% cap will be able to charge past the thicket of lobbyists in Congress.

A 10% rate cap would be “cataclysmic for co-branding,” Sorensen told Barron’s. “It would place the economics of the bank issuers in disarray, and this would have a profound impact on their ability to fund the airline programs.”

A New Use for Airline Miles: Gliding Past the Velvet Rope

January 5, 2026

New York Times

Loyalty has turned out to be lucrative. Revenue from these programs provides a major source of profit for airlines, which sell their miles to banks. In 2024, American and Delta each received about $7 billion from frequent-flier programs, according to an analysis of financial filings by Jay Sorensen, who runs IdeaWorksCompany, an airline consulting firm.

With the stakes so high, airlines, hotels, online travel agencies and banks are all vying to differentiate themselves. “Travelers are being wooed on all fronts,” Mr. Sorensen said in a statement. “The competition is creating better rewards, more lounges and new travel booking options, but it’s also reshaping the balance of power in the travel industry.”

Global air travel costs ‘cut by 40% in nine years’ as ancillary revenues soar

November 19, 2025

Travel Weekly

Optional add-ons offered to sustain lower base fares have helped cut the total cost of air travel by roughly 40% since 2016, according to new research.

Ancillary revenues from passengers paying extra for items such as baggage, seat selection and onboard food are projected to generate $157 billion this year, up from $148.4 billion in 2024 and “dramatically higher” than $67.4 billion almost a decade ago.

IdeaWorksCompany, a global consultancy on airline ancillary revenue, attributed the figure more than doubling due to steady passenger growth and the widespread adoption of basic economy fares by carriers around the world.

When bargain airfare is no bargain: airline fees hit all-time high

September 28, 2025

Boston Globe

In 2024, airlines collected a record $148 billion in fees. Commonly referred to as ancillary fees, these revenue-generating extra charges come from fees for seat selection, priority boarding, food and drink, luggage, or dedicated overhead space, and even money airlines make from selling frequent flyer miles. The previous record for ancillary fees was $109.5 billion in 2019.

“You get what you pay for, is an ancient pearl of wisdom for both consumers and airline managers,” said report author Jay Sorensen, president of IdeaWorksCompany. “The a la carte choices presented by the ancillary revenue movement have encouraged travelers to upgrade to more comfort and convenience.”

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