Airline Ancillary Revenue Up 1,200% Since 2007

The annual CarTrawler survey of global airline ancillary revenue shows growth to $31.5 billion for 2013 ─ an increase of 1,200% since the first survey in 2007.

IdeaWorksCompany researched the financial filings made by 114 airlines all over the world — 59 of which disclose ancillary revenue activity, says CarTrawler. The findings revealed that ancillary revenue reported by airlines reached $16 per passenger in 2013.

Ancillary revenue — consisting of a la carte charges, commissions on travel-oriented services, and the sale of frequent flier points — now provides the power to allow airlines to be profitable, according to CarTrawler.

For 2013, the average ancillary revenue per passenger for the 59 airlines was $16, according to the survey. The high margins associated with checked bags and loyalty points ensure this amount provides profits beyond the $6 threshold predicted by the International Air Transport Association (IATA).

Among the 59 disclosing carriers, 44 achieved ancillary revenue above $6 — ranging from China Eastern at $6.43 to Jet2.com at $55.61 per passenger, according to the survey.

“Airlines the world over share a common evolutionary pattern; the shift in focus from being a purely aviation-based service to becoming multi-product travel retailers,” said Michael Cunningham, CarTrawler’s chief commercial officer.

“The opportunity for airlines is to continue to evolve their ancillary strategy so they take full advantage of the new technology and retailing practices that will enable them to proactively service this growing customer appetite for goods and services that previously may not have been considered core to their business," Cunningham added.