An estimated 73 airlines made a whopping US$47.2 billion in extra revenue from a wide range of à la carte, commission-based, and frequent flyer related activities, representing 9.6% of total sales for these carriers.
The data is disclosed in the 2018 edition of the CarTrawler Ancillary Revenue Yearbook by IdeaWorksCompany, which researched financial filings made by 146 airlines worldwide with 73 disclosing qualifying revenue activity. Airlines joining the list for this Yearbook include Air China, Air India Express, Copa, Go Air, Jin Air, Pobeda, Scoot, Thomas Cook Airline, VivaAeroBus, Volotea and WOW air.
The top performing airlines (ancillary revenue per passenger) are largely low cost carriers, with a couple of global network airlines appearing. By region they are WOW air US$48.87 (Europe & Russia), Spirit US$50.97 (Americas) and AirAsia X US$33.12 (Asia & South Pacific).
Reproducing a quote from the late IKEA founder Ingvar Kamprad, “What is good for our customers is also, in the long run, good for us,” the report states that “this year’s record levels of ancillary revenue sales and largest-ever number of disclosing airlines is a clear indication of solid consumer support. IKEA didn’t become well-known throughout the world by disappointing customers, and likewise, ancillary revenue continues to grow by delivering consistent benefits for airlines … and consumers.
The survey covers airlines that disclosed revenue from activities such as frequent flyer points sold to partners, fees for assigned seating, and commissions from hotel bookings.
Also included in the review is a list of à la carte items sold through Amadeus, Sabre, and Travelport for each of the 73 airlines. For example, optional extras for baggage, seat assignments, and sports equipment can be booked through Travelport-equipped agencies on easyJet, and baggage, lounge access, and seat assignments can be booked for Royal Jordanian through the Sabre system.
Checked baggage: Largest single source of à la carte revenue for airlines. (Image credit: krithnarong/iStock-Getty Images)
“The largest single source of à la carte revenue remains checked baggage, with assigned seating a distant second. These are tried and trusted sources of revenue,” observed Michael Cunningham, senior vice president of distribution strategy at CarTrawler.
“But savvy airlines know they have more opportunities to serve their customers better. That includes boosting mobile web booking capabilities, implementing dynamic pricing methods, and reaching to capture more travel spending, particularly from hotel, sightseeing, and car hire.”
During its global review of ancillary revenue activities IdeaWorksCompany found airlines are increasingly more revealing about their approach to ancillary revenue. It uncovered the following examples from 2017:
- Ryanair noted big increases in the number of customers paying for allocated seating (23% in FY 2017 to 50% in FY 2018) and priority boarding (4% in FY 2017 to 20% in FY 2018).
- AirAsia disclosed the distribution of other revenue sources for 2018: baggage 40%, onboard retail sales (Big Duty Free) 15%, cargo 15%, Big Pay digital wallet 8%, FlyThru connections and ROKKI onboard WiFi 8%, onboard café 7% and seat selection 7%.
- American Airlines realises a 50% upsell rate to more expensive branded fare products, with the current basic economy and premium economy project having revenue potential of $1 billion.
- GOL claims the SMILES loyalty programme was responsible for issuing approximately 54% of total miles accrued in Brazil, which is up substantially from 29% at the end of 2013.
• The free 128-page Yearbook is available for download here.
• Featured image credit: AwaylGl/iStock-Getty Images
