Monday, October 22, 2018

Aviation


Ancillary services generate $47.2bn for 73 airlines
October 2018 432

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 that has returned $47.2 billion for revenues for 73 airlines covered in the survey, representing 9.6 per cent of total sales.

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 à 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 à 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.

The report uncovered the following great examples of added revenue generation through ancillary services:

• Ryanair noted big increases in the number of customers paying for allocated seating (23 per cent in FY 2017 to 50 per cent in FY 2018) and priority boarding (4 per cent in FY 2017 to 20 per cent in FY 2018)

• AirAsia disclosed the distribution of other revenue sources for 2018:  baggage 40 per cent, onboard retail sales (Big Duty Free) 15 per cent, cargo 15per cent, Big Pay digital wallet 8 per cent, FlyThru connections and Woki onboard Wifi 8 per cent, onboard café 7per cent, and seat selection 7 per cent.

• American realises a 50 per cent 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 per cent of total miles accrued in Brazil, which is up substantially from 29 per cent at the end of 2013.







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