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How Ryanair Achieves Ancillary Revenue Zen in a World Where Airline Profits Might Become Zero

Ryanair likely leads all other low cost airlines in total ancillary revenue. The carrier recently announced revenue from sources such as car-hire commissions, checked-baggage charges, and priority boarding, increased by 30% (compared to 2006) to €111 million for the quarter ended December 31, 2007. The airline says it is on target to generate 20% of total revenue from ancillary sources within the next three years.

Ryanair’s net margin of 21% is a remarkable achievement in an industry, which according to an International Air Transport Association forecast, averaged an operating margin of 5.6% for 2007. The secret to Ryanair’s robust profit can be partially attributed to its ancillary revenue expertise. How does Ryanair achieve these industryleading results? Here is a sampling of observations from the analysis:

  • Ryanair’s aggressive a la carte pricing strategy includes a €4 airport fee for passengers that don’t plan ahead and use the website for check-in.
  • Fees are also charged for checked baggage and start at €9 for the first piece when paid in advance at the website, which doubles to €18 when paid at the airport.
  • An exclusive relationship with Hertz contributed to year car hire revenue of nearly €23 million for fiscal year 2007.

Ryanair – The Godfather of Ancillary Revenue was released as a 10-page
Industry Analysis, and is an excerpt from the 147-page Ancillary Revenue Guide by
IdeaWorks.

To see the analysis please click here!

Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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