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Global airline ancillary revenue reaches $44.6bn

Posted by Phil Davies on
Global airline ancillary revenue reaches $44.6bn

The world’s airlines are making $44.6 billion in ancillary revenue, according to a new study.

The total represents 9.7% of total sales for the 66 airlines covered by the survey, up from last year’s 8.7%.

The 110-page CarTrawler ancillary revenue yearbook by IdeaWorksCompany provides a detailed global review of a proven revenue source that delivers $6.2 billion for United Airlines, 39.4% of sales for Wizz Air, and $49.89 per passenger carried by Spirit Airlines.

Consulting firm IdeaWorksCompany researched financial filings made by 138 airlines all over the world, discovering 66 which disclosed qualifying revenue activity.

Airlines joining the list this year include Azul, Eurowings, Jejuair, Jet Airways, South African and Vietjet.

The survey covers airlines that disclosed revenue in 2016 financial filings from activities such as frequent flyer miles sold to partners, fees for checked bags, and commissions from car rentals.

This year’s edition includes a list of the a la carte items sold through Amadeus, Sabre, and Travelport for each of the 66 airlines.

For example, optional extras for baggage, seat assignments, meals and sports equipment can be booked through Travelport-equipped agencies on AirAsia, and baggage, meals and unaccompanied minors can be booked for Pegasus through the Amadeus system.

The global review of ancillary revenue activities found that:

• Air France/KLM sent members of its Flying Blue frequent flyer programme more than 250 million emails during 2016, which is an average of 9.3 emails per member.
• AirAsia X broke with low cost carrier tradition by opening an airport lounge. The Premium Red Lounge at Kuala Lumpur provides 24-hour service, a buffet, and even showers.
• Alaska Airlines issues credit cards to 30% of its frequent flyer members and its Mileage Plan programme represents a healthy 12% of the group’s total revenues.
• Delta increased its Comfort+ load factor by 15 points to 46%. This premium economy product was introduced in May 2016 and was expected to generate up-sell revenue of $300 million during the second half of the year.
• EasyJet features the “Earlier Flight” option on its mobile application, which allows travellers to switch flights on short notice on the day of travel for the modest cost of £15.
• Qantas estimates its co-branded credit card activity represents an amazing 35% of all credit card spending in Australia.
• South African Airways had 31.4% of passengers active in the Voyageur frequent flyer programme, with these members representing nearly 30% of airline revenue.
• Wizz Air sold 10,548,710 chocolate bars (a take rate of about 8%) and 8.9 million cups of coffee (a take rate of about 7%) to its customers during 2016.

CarTrawler chief commercial officer Aileen O’Mahony said: “CarTrawler is delighted to see such significant growth in the ancillary revenue source for airlines. This is reflected in the size of the online car rental market, which Euromonitor states grew by 13% from 2015 to 2016.

“CarTrawler facilitated a sizeable share of these bookings for its 100-plus airline partners with total bookings increasing by 38% within this 12 month period.

“Not only are total bookings at an all-time high but conversion has more than doubled for some of our partners.”

The report is available at www.cartrawler.com/Yearbook-2017

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