Airline ancillary revenue grew by over a third last year as more airlines become “savvy retailers”, according to latest research
Airline ancillary revenue grew by a third in 2010
Airline ancillary revenue grew by over a third last year as more airlines become “savvy retailers”, according to latest research.
An Amadeus-sponsored study of the finances of 47 airlines by IdeaWorks, found ancillary revenues were worth €11.51 billion to the industry last year.
US carriers including United, Delta, Continental and American Airlines topped the table for the airlines making the most revenue from ancillaries with Qantas the only threat to their dominance.
The merged Continental United airline made in excess of €3.5 billion. Just outside the top five were no-frills rivals Ryanair (€801 million) and easyJet (€654 million).
In the list of ancillary revenues as a percent of total revenue UK lowcost carriers dominate the top ten with Ryanair in third (22%), Jet2.com fourth (21%), easyJet sixth (19%) and Flybe ninth (16%).
However, the study suggests the maximum an airline can expect to make from ancillaries is 30% of total revenue suggesting Ryanair chief executive Michael O’Leary’s stated desire for 100% looks ambitious.
The IdeaWorks’ study states: “The oil price peak of 2008 caused huge losses and prompted the US airlines to start charging travellers for checked baggage.
“Ultimately, the ripple effect of these fees has eased the path for more airlines to consider a la carte additions and catalysed a stunning 778% increase since 2007.”
When ancillary revenues are listed on a per passenger basis AirAsiaX comes out top on €29.45 with Qantas in second (€26.24), United Continental in third (€24.23), Jet2.com fourth (€24.20) and Allegiant fifth (€23.20).
The research tracks the increasing important of ancillaries since 2007 when just 23 airlines disclosed revenue in this area, equating to €1.72 billion.
These figures jumped to 35 and €7.68 billion respectively in 2008 and in 2009 47 airlines reported this figure, the same as 2010, although revenues were lower at €10.95 billion.
The rise of Ancillaries and associated ‘unbundled’ fares are a threat to traditional distribution models and GDSs like Amadeus are evolving technology to suit.
Amadeus currently has 16 airlines signed up to its Ancillary Services solution which Ian wheeler, vice-president marketing and distribution, said helps airlines boost revenues.
He said: “Ancillary revenue has become an enduring part of airline income statements, as revealed by this study.
“True financial success for airlines is boosted when these services are available through online, travel agency, and corporate travel distribution channels.”
| Top 10 Airlines – Total Ancillary Revenue (euros) | |||
|---|---|---|---|
Annual Results – 2010 | Annual Results – 2010 | ||
| €3,530,000,000 | United Continental | €1,527,310,000 | United |
| €2,612,200,000 | Delta | €1,507,750,000 | American |
| €1,379,524,000 | American | €1,117,120,500 | Delta |
| €1,087,268,000 | Qantas | €782,903,000 | Qantas |
| €834,492,000 | US Airways | €663,600,000 | Ryanair |
| €801,600,000 | Ryanair | €608,796,693 | easyJet |
| €654,824,400 | easyJet | €540,589,500 | US Airways |
| €426,240,000 | Emirates | €534,143,000 | Air Canada |
| €390,065,000 | Alaska Airlines | €368,869,000 | Alaska Airlines |
| €359,489,220 | TAM Airlines | €356,742,400 | TAM Airlines |
Data from IdeaWorks and Amadeus. 2010 carrier results were based upon recent 12-month financial period disclosed which may have ended during 2010 or 2011.
