Airline ancillary revenue projected to be $92.9 billion worldwide in 2018
Extra fees for luggage, seat selection, leg room, in advance bookings and rentals are expected to boost airline revenue by 13 percent to 92.9 billion dollars in 2018 – a massive 312 percent increase from 2010 at 22.6 billion dollars, according to a report released by consultancy firm IdeaWorksCompany and rental company CarTrawler.
According to the report, which based its estimates on the 2017 figures of 73 carriers and projected these on to 175 airlines for 2018, these additional fees – known as ancillaries – are boosting revenues for airlines.
Indicatively, the report found that 10.7 percent of all airline revenue is a result of extra charges. Based on this estimate, the International Air Transport Association (IATA), which expects over 4.3 billion air travelers in 2018, says it amounts to an extra 21.32 dollars per passenger.
“All those individual sales of seat assignments, checked bags, and frequent flyer points provide a solid hedge against fuel prices,” the report goes on to note, adding that the connection between ancillary revenue and financial health for airlines is now clear and is a solid component of the industry’s financial profile.“Nearly 93 billion dollars in revenue indicates that good merchandisers are selling products desired by a vast number of customers… Most of them now have the choice of paying a little extra for more comfort and convenience – thus providing airlines with a golden opportunity to build and strengthen their customer experience in the long term,” said Aileen McCormack, chief commercial officer at CarTrawler.
CarTrawler is a leading B2B travel technology platform and IdeaWorksCompany boosts airline profits through innovations in ancillary revenue, a la carte pricing, and loyalty marketing.