Airline ancillary revenue tipped to reach $82bn this year

Airline ancillary revenue tipped to reach $82bn this year

Airline ancillary revenue is projected to reach $82.2 billion worldwide in 2017 – almost triple the figure achieved in 2010.

This year’s total achieved from airline add-on sales is estimated to be 22% ahead of 2016.

The CarTrawler worldwide estimate of ancillary revenue for 2017 represents a 264% increase from the 2010 figure of $22.6 billion, which was the first annual ancillary revenue estimate.

Earlier this year, CarTrawler and IdeaWorksCompany reported the ancillary revenue disclosed by 66 airlines for 2016.

These statistics were applied to a larger list of 184 airlines to provide a global projection of ancillary revenue activity by the world’s airlines for 2017.

Ancillary revenue is generated by activities and services that yield revenue for airlines beyond the simple transportation of passengers from A to B.

The wide range of activities includes commissions gained from hotel bookings, the sale of frequent flyer miles to partners, and the provision of a la carte services − providing more options for consumers and more profit for airlines.

Revenue from optional services, such as onboard sales of food and drink, checked baggage, premium seat assignments, and Wi-Fi access, was determined to represent $57 billion of the estimated 2017 global total, up from $44.9 billion last year.

The remaining $25.2 billion came from non-fee activity such as the sale of frequent flyer miles to programme partners, and commissions earned on the sale of car hire, hotel stays and travel insurance, against $22.5 billion in 2016.

CarTrawler chief commercial officer Aileen McCormack said: “It is terrific to see such healthy growth in worldwide airline ancillary revenue, global online car rental grew by CAGR of 9.3% for the period 2010 – 2016, 7.9% is expected this year and a further 6.9% in 2018.

“These figures indicate that ancillary profits are on a prolonged, upward trajectory and we are delighted to see more airlines looking further than traditional ancillary sources.”

Revenue from optional services, such as onboard sales of food and drink, checked baggage, premium seat assignments, and Wi-Fi access, was determined to represent $57 billion of the estimated 2017 global total ($44.9 billion for 2016).

The remaining $25.2 billion comes from non-fee activity such as the sale of frequent flyer miles to program partners, and commissions earned on the sale of car hire, hotel accommodations, and travel insurance ($22.5 billion for 2016).

Analysis performed by IdeaWorksCompany during the past seven years reveals natural airline groupings (or categories) based upon a carrier’s ability to generate ancillary revenue. The “percentage of revenue” results associated with four defined categories have been applied to a worldwide compilation of operating revenue disclosed by 184 airlines.

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