Ten low cost airlines join this year’s survey, including Go Air, Jin Air, Pobeda, Scoot, Volotea, VivaAeroBus, and WOW air.
DUBLIN, IRELAND – “What is good for our customers is also, in the long run, good for us,” IKEA founder Ingvar Kamprad once said. The 2018 edition of the CarTrawler Ancillary Revenue Yearbook by IdeaWorksCompany provides testimony to the success of a wide range of a la carte, commission-based, and frequent flyer related activities. This year's record levels of ancillary revenue sales and largest-ever number of disclosing airlines provide 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.
IdeaWorksCompany researched financial filings made by 146 airlines all over the world, discovering 73 that disclosed qualifying revenue activity. Airlines joining the list for 2018 include Air China, Air India Express, Copa, Go Air, Jin Air, Pobeda, Scoot, Thomas Cook Airline, VivaAeroBus, Volotea, and WOW air. Now available free online, the 128-page, 2018 Yearbook provides a detailed global review of a proven revenue source that delivers a mammoth $5.7+ billion for United Airlines, 46.6% of sales for Spirit, and $48.87 per passenger carried by WOW air. Overall, the $47.2 billion represents 9.6% of total sales for the 73 airlines covered by the survey.
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. The Yearbook includes a list of the a 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.
“The largest single source of a la carte revenue remains checked baggage, with assigned seating a distant second. These are tried and trusted sources of revenue. 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,” said Michael Cunningham, Senior Vice President of Distribution Strategy at CarTrawler.
Airlines are increasingly more revealing about their approach to ancillary revenue. During the course of its global review of ancillary revenue activities, IdeaWorksCompany 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 Woki onboard Wifi 8%, onboard cafe 7%, and seat selection 7%.
- American realizes 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 program was responsible for issuing approximately 54% of total miles accrued in Brazil, which is up substantially from 29% at the end of 2013.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
