The amount of money collected by airlines for added extras soared by almost 21% last year amid the rising popularity of budget carriers, according to a new report.
The analysis of 63 airlines found that ancillary revenues rose to $38.1 billion in 2014 from $31.3 billion the previous year.
The figure represents an increase of more than $35.6 billion since 2007. Revenue among low-cost carriers jumped more than $2.9 billion, or 32.8% over 2013.
Ancillaries can represent 38.7% of a carrier’s revenue, as it does for Spirit Airlines in the US, or $56.28 per passenger for Jet2.com in the UK, and $5.86 billion for United Airlines, claims analysis by US aviation consultancy IdeaWorks in a report put together with CarTrawler.
Jet2.com topped the list of the top 10 airlines based upon ancillary revenue on a per passenger basis for the second year running.
Jet2.com was also found to be the UK carrier with the highest ancillary revenue as a percentage of total revenue at 28.5%.
The percentage recorded by Wizz Air was 33.7%, Ryanair at 24.6%, Flybe at 20.7%, easyJet at 18.8% and Norwegian at 14.4%, the report shows.
British Airways was just 1.9% and Virgin Atlantic at 4.9%.
The report said: “Jet2.com defies definition as an airline, and in reality is a holiday package company with an airline that excels at a la carte sales.
“For the global network airlines in this top 10 list, their presence is assured by a healthy dose of revenue from the sale of miles or points to the banks issuing their co-branded credit cards.
“For many carriers the majority of miles and points are now accrued through partners such as co-branded credit cards, hotels, car rental companies, and retailers. Airlines also use their frequent flier programs and co-branded credit cards to selectively deliver a la carte benefits such as checked baggage and priority boarding to program members.
“Banks have contracts with airlines and pay them for these cardholder benefits, in addition to the miles and points purchased as a result of charge activity.
However, the report said: “Ryanair once boldly sought to replace passenger fares with ancillary revenue; this dream now seems elusive for all lo cost carriers.
“The fine tuning of fees and the tweaking of product design may allow top carriers to surpass 40%. However, attempts among the most fee-conscious carriers to reach higher now seem stalled.”
“This reality is leading more low cost carriers to adopt methods that attract high yield business travellers.
“Ryanair has made significant changes to its business plan by adding more frequencies on select routes, creating a bundled fare with business-friendly features, and even targeting commercial travellers with an advertising campaign.
“It’s an approach already implemented by easyJet for the same reasons. The airline sells annual subscriptions called easyJet Plus that include assigned seating, fast track security, speedy boarding, and an additional carry-on bag for an annual price of £170.
“The carrier has introduced a bundled “Inclusive” fare for easier distribution through travel agencies and corporate travel departments.”
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