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Those annoying fees pay off for airlines

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- Fees for such things as checked baggage and soft drinks accomplished their purpose, boosting airline revenues for the sixth straight month, an industry group said Wednesday.

The Air Transport Association of America said passenger revenue jumped 25% in June, compared to the same month in 2009.

ATA spokesman David Castelveter said the rise in revenue stems from "a combination of improving economic conditions, increase in business travel and revenue from ancillary fees."

This is welcome news to the airlines, which have struggled with slumping demand because of the recession and volatile fuel prices over the last couple years.

To take the sting out of lost revenue, most airlines have tacked on a slew of extra fees, known as ancillary fees, for checked baggage, drinks, curbside check-in, pet travel and other services that used to be included in the price of fare.

Airline stock activity was mixed Wednesday.

The stock for AirTran (AAI) was down 4% after disappointing results and lower-than-expected profit. But the stock for U.S. Airways (LCC, Fortune 500) rose 3% after reporting earnings that beat estimates.

U.S. Airways Chief Executive Doug Parker said the earnings increase was a result of a three-year plan to "return to profitability, including reducing capacity, maintain cost discipline, increasing ancillary revenues and establishing industry-leading operational reliability." To top of page

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