Airline ancillary revenue ‘will break $22bn this year’

Ancillary revenue for airlines worldwide is likely to rise to $22.6 billion (€18.4bn) this year with agents likely to start taking a greater share, new research shows.

The Amadeus Guide to Ancillary Revenue by consultancy IdeaWorks suggests further growth through the trade.

Amadeus commercial executive vice-president Philippe Chérèque said: “€18.4 billion, while significant, is still less than 5% of the operating revenue generated by the airlines in this study.

“We expect to see ancillary revenues grow significantly as airlines are only now beginning use the high-yield travel agency channel to sell their range of ancillary services.

“Amadeus is talking to a number of airlines to help them with this.”

Chérèque predicted that ancillary revenues could increase by more than 300% to as much as €74.8 billion.

He forecast a rise in the use of mobile technologies to push ancillary services.

“Looking to the future, we expect the mobile channel to emerge as a significant platform for ancillary services sales as it offers the ability for airlines and travel agencies to push context-sensitive offers to clients,” said Chérèque.

“Travellers arriving early at the airport might be offered an hour in the Premium Lounge, for example, for a price, of course.”

But Chérèque added: “As ancillary services represent an ever larger proportion of revenue, and add more and more layers of complexity to the airline offer, it is vital that airlines consider the end-to-end process of selling, fulfilling and delivering ancillary services.

“This is difficult even when things are going smoothly. But when a flight is cancelled due to bad weather, an airline has to re-accommodate a plane full of passengers, each with their own combination of assigned seats, in-flight entertainment, additional bags and preferred meals. Successfully translating ancillary revenue into additional profit rests on an airline’s ability to manage such situations efficiently.”

The airline generating the most through ancillary revenues were identified as including Ryanair and Flybe.

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