The global airline industry is expected to generate nearly $93bn (€82bn) in ancillary revenues this year, a new study claims. The total would represent a 312% rise in revenues from non-air fare sources in the past eight years.
“Nearly $93bn in revenue indicates that good merchandisers are selling products desired by a vast number of customers”, said Aileen McCormack, chief commercial officer at car hire software firm CarTrawler, which compiled the study on behalf of aviation research group IdeaWorks.
“The International Air Transport Association] estimates that more than 4.3 billion travellers will depart on flights in 2018. Most of them now have the choice of paying a little extra for more comfort and convenience thus providing airlines with a golden opportunity to build and strengthen their customer experience in the long-term,” she said.
Ancillary revenues are generated from everything sold by an airline outside of the basic flight ticket and include any number of items from baggage fees and onboard food and beverages to priority seating and boarding, car hire and hotel bookings.
In July, IdeaWorks and CarTrawler reported that the world’s 10 leading airlines pulled in a combined €25.4bn from ancillary revenues last year, up 6% on 2016, further underlining the importance of non-air fare income streams for the industry. In its last financial year, the 12-months to the end of March, Ryanair’s total revenues increased 8% to €7.1bn. Of that total 28%, or €2bn, was generated from ancillaries. That €2bn was itself up 13% on the previous year’s total.
According to CarTrawler, $64.8bn worth of ancillary revenues this year will come directly from so-called a la carte items, such as baggage charges. Ryanair makes all of its non-fare revenues from such items. The airline was one of only four European carriers to make the top 10 list of ancillary-generating airlines last year; along with Air France-KLM, Lufthansa and Easyjet.
IdeaWorks said it anticipates ancillary revenue activity will also lift among smaller airlines in Africa, Asia, the Middle East and South America.
“Ancillary revenue keeps on growing and has become a mandatory component for the revenue mix of all airlines,” said CarTrawler’s senior vice president of distribution Michael Cunningham.