Delta Air Lines, Inc. (NYSE:DAL) and American Airlines Group Inc (NASDAQ:AAL) are good at collecting ancillary fees, Joseph DeNardi said in a recent discussion on CNBC.
According to the Stifel Nicolaus airlines analyst, he thinks that certain airlines do a better job at collecting ancillary fees than their competition. Among those airlines that he thinks does this are Delta Air Lines, Inc. (NYSE:DAL), American Airlines Group Inc (NASDAQ:AAL) and United Air Lines, Inc.
DeNardi said that collecting these fees are a more important to the business plans of Spirit Airlines Incorporated (NASDAQ:SAVE) and Allegiant Travel Company (NASDAQ:ALGT). These air carriers, he noted, are more focused on low-cost, low-airfare strategies which make up the difference with higher ancillary revenues.
He added, however, that Delta Air Lines, Inc. (NYSE:DAL), American Airlines Group Inc (NASDAQ:AAL) and United Air Lines, Inc. have become better at this particular aspect of their business. He explained:
“But Delta, United and American all do a very good job, particularly over the past couple years, at growing the ancillary base. Obviously, Southwest and JetBlue [are]not quite as effective with their bag fee strategy but I think Delta, United and American are all pretty successful in that regard.”
Asked about smaller airlines and whether Stifel Nicolaus covers these stocks, DeNardi said that his firm does. He was asked why companies like Hawaiian Holdings, Inc. (NASDAQ:HA) [holding company for Hawaiian Airlines, Inc.]and Alaska Air Group, Inc. (NYSE:ALK) don’t get much love.
He said that Hawaiian has had a pretty good run this year which is noteworthy because of its underperformance last year. According to the analyst, the management at this airline has shown their willingness to change some of their growth strategy and focus more on higher margin network alignment. Alaska, he said, is one of the best operators in the industry though they have been put under more pressure because of the recent adding of capacity by Delta Air Lines, Inc. (NYSE:DAL). He also noted that Delta is their top pick in the industry at the moment while he did not mention American Airlines Group Inc (NASDAQ:AAL) again.
Watch the discussion in the video below.