The airline industry has faced one of the worse economic downturns in its history. Though signs are pointing to a slow recovery, two sure-fire methods for sustainability keep coming up in conversations with airlines – consolidation and new sources of revenue. They both cost passengers more money and are largely disliked by travelers. But with fee revenue now in the billions of dollars, what's not to like ... if you're an airline?

The U.S. Department of Transportation (DOT) announced a 42 percent rise in revenue from airline ancillary fees in 2009. Most of the $7.8 billion in revenue came from checked bag fees. The Associated Press reports that Delta, currently the world's largest airline, collected the most revenue from fees at $1.65 billion. American was second, followed by US Airways. Southwest doesn't charge for the first two checked bags, but it still earned fourth place in the fee rankings. Southwest, which carries more passengers than any other U.S. airline, charges $50 for a third checked bag, as well as fees for pets traveling in the cabin and unaccompanied minors.

Airlines that follow a fee-driven business model are not necessarily the ones raking in the greatest free revenue. Spirit Airlines, which will begin charging as much as $45 for a carry-on bag in August and demands fees for just about every other amenity or service, did not rank among the top 10 U.S. carriers in fee revenue. However, 21 percent of its operating revenue comes from ancillary charges making it the most fee-dependent carrier in the U.S.

Given numbers like $8 billion, there is little chance in the airline industry that this business model will fade. Now that Continental and United Airlines have announced their intention to merge, it will be interesting to note which fee structure prevails. However, it may not only be the fees and fares we need to watch. Will Continental's non-expiring frequent flyer miles suddenly carry a "use by" date like United's mileage program does? It will certainly be determined by the tactic that earns the most revenue.

Why can't airlines just raise fares? Airlines would like to raise fares whenever possible. The problem is that if competitors don't go along, the fare hike could drive away customers seeking only the cheapest flights. Airline fees give the airlines the advantage of effectively raising the cost of flying for many who are lured by lower fares, while allowing the airline to position its fees as a generous list of value-added choices for its flyers. When billions in losses can be countered by billions in add-on fees, we guess they'll be offering such generosity for some time to come.