Innovations help generate $56 bn of ancillary revenues for top global airlines

Innovations help generate $56 bn of ancillary revenues for top global airlines
Published: 30 September 2019 - 8:45 a.m.

Ancillary sales now make up more than 10% of revenues for a group of 76 global airlines surveyed in a new report.

The group of airlines, which appear in the 2019 edition of the CarTrawler Ancillary Revenue Yearbook, generated $55.7 from non-ticket sales such as fees for assigned seating, and commissions from hotel bookings.

IdeaWorksCompany’s research shows that annually, ancillary sales provide $7.2 billion for American Airlines, 29% of sales for AirAsia, and $18.47 per passenger carried by the Lufthansa Group.

Aileen McCormack, Chief Commercial Officer at CarTrawler, said: “It is now common knowledge among airlines management that a sophisticated ancillary strategy is the key to unlock significant revenues alongside a premium customer experience.

“Airlines need to utilise data in a clever way so that they can continually innovate; if they do not fully embrace mobility by ‘owning the last mile’ they will be left behind, as this sector is evolving as fast as their own aircraft fly.

“Airlines need to appreciate that every customer’s journey will differ in some way and offer them the optimal platform on which they can quickly and effectively choose how they travel from door to door, not just from airport to airport. Only then will airlines truly maximise their ancillary potential.”

Some examples of recent ancillary activities include Air France and KLM’s Flying Blue program, which introduced miles for the purchase of paid options such as premium meals, seat assignment, and baggage.

Meanwhile, the medium-size carry-on bag restriction associated with the Basic Economy fare at American was discontinued during September 2018. The number of consumers upgrading to a higher fare has held steady at 60%.

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