Airline ancillary revenue reaches $27.1bn, finds CarTrawler study

Airline ancillary revenue has reached more than $27.1 billion against $2.45 billion five years ago.

The latest estimate comes from a study of 53 airlines charging for checked bags and earning commission from car rental.

The 80-page CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany shows that paid-for extras can account for more than 38% of an airline’s revenue.

“The consistent growth of extra revenue from three key sources demonstrates how this activity has become a crucial component of airline income,” according to the report.

“Carriers worldwide rely upon the revenue from frequent flier activities, a la carte features, and commission-based products, to create profits in an era of high fuel costs – while keeping fares modest in a recession-weary world.”

Examples include:

  • Air Berlin: Realised income of €184.4 million from its top bonus frequent flier programme last year

  • KLM: Economy comfort seating contributes €65 million annually on transcontinental routes

  • Ryanair: It estimates that 18 passengers pay for assigned seating on a typical flight.

  • Vueling: Generates ancillary revenue through the licensing of its brand to a hotel in Barcelona which opened in March.

  • Norwegian: The airline owns a portion of Norwegian Finans Holding which operates as Bank Norwegian. The bank paid commissions of $6.9 million for activity related to the Bank Norwegian Visa card.

  • Southwest: EarlyBird boarding provided $161 million in 2012.

  • SpiceJet: Buy-on-board contributed $4.9 million to 2012 revenues.

  • United: Total cash proceeds from frequent flier miles sold in 2012 was $2.852 billion.

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