The top 10 carriers in the list achieved a huge increase of nearly $4.6 billion in a single year, which represents revenue growth in excess of 22.5%. Revenues and passenger traffic for these airlines increased due to improving economies and these are leading factors for annual ancillary revenue gains.
DUBLIN, IRELAND – For the eighth consecutive year, 63 airlines tracked in a CarTrawler-sponsored study reported substantial increases in revenue from retail activities and the sale of a la carte services and frequent flier miles.
- Ancillary revenue per passenger is $17.49, 8.5% more than the 2013 result.
- Activity among low cost carriers (LCCs) jumped more than $2.9 billion, or 32.8%.
- Ancillary revenue among US major airlines increased $2.6 billion, or 18.7%.
The IdeaWorksCompany study focused on 63 airlines which disclosed qualifying revenue activity, to reveal that ancillary revenue reported by these airlines was $38.1 billion for 2014.
“Ancillary revenue is an increasingly important indicator of commercial success, and a major contributor to the bottom line of airlines across the globe,” says Michael Cunningham, Chief Commercial Officer at CarTrawler. “The secret to unlocking this revenue stream can be found in the data that customers generate with every transaction. It is no longer just the preserve of low cost carriers – it is something from which all airlines are benefiting. The question is not who is doing it, it’s how well it is being done.”
The top 10 carriers in the list achieved a huge increase of nearly $4.6 billion in a single year, which represents revenue growth in excess of 22.5%. Revenues and passenger traffic for these airlines increased due to improving economies and these are leading factors for annual ancillary revenue gains. These airlines also had individual initiatives that boosted results. The big ancillary revenue numbers posted by carriers such as Air France/KLM, American, and United, include fees charged for baggage and extra leg room seating. But a big portion of the ancillary revenue total is generated by the sale of miles or points to banks that issue co-branded credit cards.
When ancillary revenue is measured as a percentage of revenue, low cost carriers top the chart. Since 2011 the top slot has been held by US-based Spirit Airlines, which is conspicuous among consumers and regulators for its aggressive pursuit of a la carte sales. But other LCCs, such as Ryanair and easyJet, have broadened their strategy to seek higher-revenue business travelers, in response to slower ancillary sales growth among their traditional leisure travelers. Ryanair has made significant changes to its business plan by adding more frequencies on select routes, creating a bundled fare with business-friendly features, and even targeting commercial travelers with an advertising campaign.
For many carriers the majority of miles and points are now accrued through partners such as co-branded credit cards, hotels, car rental companies, and retailers. Banks have contracts with airlines and pay them for these cardholder benefits, in addition to the miles and points purchased as a result of charge activity. But as the overall numbers show, the ancillary revenue boom continues unabated.
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
