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September 2022, Virtual
September 29 2022, Virtual
Airlines are continuing to make more money from the sale of ancillary services, according to research.
The world’s carriers are predicted to pull in total revenue of €42.6 billion in add-on services such as baggage fees, onboard food and drink and early boarding benefits, according to the report from consultant Idea Works Company and online car rental specialist Car Trawler.
This represents an 18 per cent increase in revenue from 2012’s figure of $36.1 billion.
According to the research, ancillaries now account for 6 per cent of all airline revenue and total add-on sales have almost doubled in the last three years when they were around $22.6 billion in 2010.
Optional services such as onboard food and drinks, checked baggage and early boarding access now account for about 56 per cent or $23.7 billion of total airline ancillaries.
“This leaves a significant 44 per cent share provided by business opportunities linked to a passenger’s trip such as hotel and car rental bookings, and even the use of a co-branded credit card to accrue frequent flier miles or points,” said Jay Sorensen, president of Idea Works Company.
The major seven US airlines are leading the way with the charging of ancillary fees with predicted total revenue of $14.3 billion in 2013 - baggage charges alone make up around 25 per cent of this add-on income.
Mike McGearty, CEO of Car Trawler, added: “Airlines are not just competing with each other for a share of the passenger market, they’re also competing for a cut of each passenger’s total travel budget.
“The airlines that will win the ancillary revenue race will be those who adopt a proactive approach to online retailing by focusing on satisfying the needs of the customer along every step on the sales journey and by ensuring that their ancillary partners do the same.”