Global airline ancillary revenue is projected to rise by 11% this year to $36.1 billion.
Global airline ancillary revenue projected to break $36bn this year
Global airline ancillary revenue is projected to rise by 11% this year to $36.1 billion.
Growth for US carriers was modest at 4%, with Europe at 11% and Asia Pacific even higher at 21.3%.
The average percentage of revenue remained at 2.9% for traditional airlines, suggesting there is a need for more innovative ways to sell ancillary services and that the travel agency channel is important to future ancillary growth, according to the study by Amadeus.
Figures compiled by Amadeus and specialist consultancy IdeaWorksCompany covering 176 airlines shows that if airlines were to forgo the revenue contribution from ancillaries, it would mean a loss for a “great number”.
Ancillary revenue provides good amounts of cash to buy new aircraft interiors, invest in new equipment, and provide funds for expansion, the study shows.
IdeaWorksCompany president Jay Sorensen said: “The majority of the 11.3% increase can be attributed to increased passenger revenue posted by airlines all over the globe.
“Low cost carriers will also contribute to the increase as they boost their ancillary revenue to higher levels through more products and better marketing.
“The next surge of activity will occur when the sale of optional extras becomes more prevalent in the automated booking systems used by travel agents.
“Look for airlines to become better retailers through all distribution channels during the next three years.”
Amadeus distribution senior vice president Holger Taubmann said: “It’s encouraging to see ancillary revenue growing at over 11% this year which demonstrates the significant commercial potential for airlines.
“However, to capitalise on this, it is imperative that airlines adopt a multichannel approach, accessing the opportunity presented by in-direct travel agency sales of ancillary services.”
The company’s airline IT senior vice president Julia Sattel added: “To power the sale of ancillary services, it’s paramount that airlines adopt the Electronic Miscellaneous Document (EMD which provides industry standardisation.
“In the first half of 2012, Amadeus issued 4.88 million EMDs, This is testament to the importance of ancillary services in driving revenues and supporting growth.”
