INTERNATIONAL. Ancillary revenues among the top ten best-performing airlines reached nearly US$26 billion in 2015, according to a new report from IdeaWorksCompany.
United Airlines topped the rankings with almost US$6.2 billion in ancillary revenue, defined by IdeaWorksCompany as “revenue beyond the sale of tickets that is generated by direct sales to passengers, or indirectly as a part of the travel experience”.
American Airlines (US$4.7 billion), Delta Air Lines (US$3.8 billion), Air France-KLM (US$2.2 billion) and Southwest Airlines (US$2.1 billion) rounded out the top five [Table 1].
The top performing airline per passenger is Spirit Airlines, at US$51.80 per customer. Spirit also tops the list for revenue share, at 43% of total sales [Table 2].
IdeaWorksCompany said that when it first published its ancillary revenue review in 2008 the top ten airlines generated US$8.4 billion that year.
The report, 2015 Top 10 Airline Ancillary Revenue Rankings, noted that consumer behaviour supported the popularity of seat-only tickets that deliver a lower price. “The array of choices provided by a la carte methods allows these consumers to click and pay a premium for more comfort and convenience,” it said.
“Ancillary revenue represents the safety net which determines whether low fares can coexist with airline profitability. Even with a dramatic fall in oil prices, ever-present competition requires successful airlines to be ever-innovative in the quest for revenue. The potential for adding 10%, or even 43%, more revenue to the bottom line ensures ancillary revenue will continue to grow.”
IdeaWorksCompany reviewed 135 airlines for the report, with 67 revealing figures related to ancillary revenue.
“Airlines can now choose from an ever more sophisticated range of ancillary products and technology,” said Michael Cunningham, Chief Commercial Officer at CarTrawler, which sponsored the report. “The challenge is to ensure that the ancillary benefits do not overshadow the core principles of customer experience that airlines have built their brands on. The opportunity is to deliver a personalised offering that complements their brand promise. Airlines that do this will see ancillary revenue gains, increased brand loyalty and a boost in customer lifetime value.”
The results for all the 67 disclosing airlines will be released in September 2016 as the annual CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany. A further report, scheduled for November 2016, will use these results to extrapolate total ancillary revenue generated by 180 airlines around the world.