The second largest U.S. airline
Delta Air Lines Inc.
) has once again emerged as the highest collector of baggage fees
for the first half of the year.
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According to the Bureau of Transportation data, Delta collected
about $430 million in baggage fees for the first six-month period.
The company is leading the airline industry as a top collector for
more than three years in a row. Delta collected baggage fees of
about $863 million in 2011, $952.3 million in 2010 and $481.7
million in 2009.
Delta accounted for one-fourth of total fees collected by the U.S.
industry in the first half of 2012. The industry had collected more
than $1.7 billion in baggage fees from passengers. This is the
highest fees ever collected by the industry in the first half of a
The largest U.S. airline
United Continental Holdings Inc.
) was the second highest collector with nearly $351 million in fees
for the same period. American Airlines, a wholly owned subsidiary
) was not far behind and collected fees worth $288.0 million in the
US Airways Group
) was fourth in the row with total fee collection of $261 million.
We believe Delta's trend of being the top performer in baggage fees
collection will continue in the future as well. Delta Air Lines is
progressing well on improving ancillary revenues by adding new
features to its services as well as expanding new products.
The company is expanding seating facilities as well as installing
winglets and WiFi connectivity in the fleet. It is going wireless
with in-flight entertainment system - Delta Connect. While these
efforts would generate additional revenue of $1 billion by 2013, we
believe upgrading of fleet products and services would dilute
short-term margins and profitability.
We are maintaining our long-term Neutral recommendation on Delta
Air Lines. For the short term, the company retains a Zacks # 4