As airlines’ quarterly earnings reports become available this week, it’s clear, with the notable exceptions of Airtran and Allegiant Air, that there is not a lot of good news to go around. And while airline stocks continue their rise and fall in response to the latest market announcements and gloomy forecasts, there appears to be one growing beacon of hope for airlines’ profitability- ancillary revenues…
As airlines’ quarterly earnings reports become available this week, it’s clear, with the notable exceptions of Airtran and Allegiant Air, that there is not a lot of good news to go around. And while airline stocks continue their rise and fall in response to the latest market announcements and gloomy forecasts, there appears to be one growing beacon of hope for airlines’ profitability- ancillary revenues.
Even amidst the uncertainty and decrease in traffic, particularly lucrative business traffic, many carriers have reported significant increases in their ancillary revenue programs. Relatively new to the North American market, the concept of ancillary revenues has received some bad press and consumer backlash over the past 12 months – largely as a result of unfamiliarity and at times, poor implementation by the airlines. In spite of this, however, ancillary revenue programs are being implemented by more carriers at a time when their business model is rapidly changing, and the need for sustainable profits and growth is paramount.
In the US, where many consumers are resentful of paying for “extras”, a considerable amount of work is needed to change the perception of ancillary revenues. To overcome this challenge, and addressing the need for more education and a better understanding of ancillary revenues and related a-la-carte fees, Airline Information is bringing an industry forum to Miami on May 12-13, 2009, where executives from more than 50 airlines will gather to discuss this maturing segment.
The 2009 Airline Sales Channel Forum and A-La-Carte Pricing Conference will focus on “the new airline business model”, exploring new revenue streams that align with the brand and overall airline strategy, while not alienating passengers. It will look at emerging ancillary revenue concepts and the latest revenue practice for American carriers – a- la-carte pricing, or charging separately for items that used to be included in the price of a ticket, such as onboard food and baggage.
In a recent survey conducted by Airline Information during March 2009, in which 206 airline and industry professionals took part:
- 48% of airline respondents confirmed their airline was charging for a-la-carte items (onboard food, seat assignments, baggage etc)
- 62% felt that their airline did not adequately or transparently relay a-la-carte options and fees to customers
- 89% were going to implement and/or add new a-la-carte fees within the next 12 months
- 68% envisage airlines overall increasing their a-la-carte fees over the next 12 months
- 57% do not feel it is necessary to reduce fares in order to successfully add and sustain a-la-carte fees
With more than 175 airline managers, technology providers and industry influencers already registered, the Airlines Sales Channel Forum and Airline A-La-Carte Pricing Conference offers airline professionals the chance to meet with industry peers to discuss the next phase of ancillary revenue development, as well as serving as the central "marketplace" of ancillary revenue and a-la-carte pricing ideas, products, services, and contacts, taking airline ancillary revenue generation to a new level.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
