EasyJet rakes in record $4.5 billion from fare add-ons as CEO slams 'unfair' penalty over practice

EasyJet on Tuesday said it made a record £3.59 billion ($4.5 billion) from charging passengers for flight add-ons such as extra baggage in the full year to October, as the budget airline's CEO criticized a recent Spanish fine over the practice.

The easyJet group, which includes an airline and a package holiday provider, on Tuesday reported that ancillary revenue — which can include an additional luggage allowance, seat selection, priority boarding and in-flight meals — rose 22% year-on-year.

Many airlines have stripped back what they include in their flight fares in recent years, instead relying on cashing in more from individual add-ons, as competition to offer ultra-low cost base fares intensifies.

Last week, Spain's Ministry of Consumer Rights issued five low-cost carriers — including easyJet, Norwegian, Spain's Vueling and Ireland's Ryanair — with penalties for "abusive practices such as charging extra for hand luggage or reserving adjacent seats to accompany dependent persons." EasyJet was fined 29 million euros.

"We completely disagree with that, we think it goes completely against European law and European law's going to trump that," easyJet CEO Johan Lundgren told CNBC's "Squawk Box Europe" on Tuesday.

"It's a highly unfair idea that you should not be able to offer products and services targeted for those people who want to use that. One-third of our customers choose not to buy any ancillaries at all, so why should they care about the cost of something that somebody else is prepared to pay?"

He added, "It's a good thing for customers and it keeps fares down."

Spain's Association of Airlines (ALA), Ryanair, Norwegian and easyJet last week all criticized the fines and said they would dispute them.

The airlines were also