“Ancillary revenues have become the new decade’s money tree for airlines”

A report featuring 47 carriers has reported 2010 ancillary revenue activity of €15.11 billion ($21.46 billion). This represents ancillary revenue growth of 38 percent over 2009 and 96 percent since 2008.

Published: 03 Aug 2011

A report featuring 47 carriers has reported 2010 ancillary revenue activity of €15.11 billion ($21.46 billion). This represents ancillary revenue growth of 38 percent over 2009 and 96 percent since 2008.

According to the new 2011 Amadeus Yearbook of Ancillary Revenue by IdeaWorks, there are two trends that stand out: First, airlines already engaged in ancillary revenue activities are bringing more products to market. This occurs through the introduction of new a la carte features and the inclusion of distribution methods beyond the carrier’s website. Second, many of these airlines are becoming savvy retailers. Branding has been emphasised, pricing is more sophisticated, and an increasing number of features are presented during the booking process.

IdeaWorks analysed financial statements from 104 airlines to develop a picture of ancillary revenue activity by carriers worldwide. Of the 104 airlines, 47 reported revenue details identifying ancillary activities.

Top slot – United Continental

Continental disclosed its ancillary revenue results for the first time when it merged with United. The combination has created an ancillary revenue giant with annual results in excess of €3.5 billion, or nearly $5 billion (based on current exchange rates).

 

 

The strong showing by a merged United and Continental is being termed as a significant development for 2010. United has been hard at work for years perfecting it’s a la carte product offer under the Travel Options by United brand name. Continental has been innovating too and added fare lock and extra legroom seating options during 2010. IdeaWorks estimates the combined revenue from the sale of United Mileage Plus and Continental OnePass miles was approximately $3 billion (€2.1 billion) for 2010. Synchronising the ancillary revenue efforts of these two airlines will undoubtedly produce higher results for 2011, as per the report.

 

 

 

 

Other highlights as follows:

      • Air Berlin: The carrier realised more than €38 million from inflight and duty free sales during 2010.

      • Allegiant Airlines: Receipts from third party sources, such as hotel accommodations and rental cars, produced net revenue of €16.9 million in 2010 with a pre-tax margin of 24 percent.

      • Emirates: Excess baggage charges delivered €56 million for the fiscal year ended 31 March 2011.

      • Hainan Airways: The sale of frequent flier miles in its Fortune Wings Club provided more than €4.2 million for 2010.

      • JetBlue: The “Even More Legroom” a la carte seating feature generated more than €60 million of revenue in 2010.

      • South African Airways: Its Voyager frequent flier program contributed €36.9 million during the fiscal year ended 31 March 2010.

      • US Airways: Choice Seats, where consumers pay more to get a better seat in coach, provided €21 to €28 million in revenue during 2010. The carrier estimates this could be €141 to €211 million once it’s sold through all distribution channels.

      • Air Berlin: The carrier realised more than €38 million from inflight and duty free sales during 2010.

      • Allegiant Airlines: Receipts from third party sources, such as hotel accommodations and rental cars, produced net revenue of €16.9 million in 2010 with a pre-tax margin of 24 percent.

      • Emirates: Excess baggage charges delivered €56 million for the fiscal year ended 31 March 2011.

      • Hainan Airways: The sale of frequent flier miles in its Fortune Wings Club provided more than €4.2 million for 2010.

      • JetBlue: The “Even More Legroom” a la carte seating feature generated more than €60 million of revenue in 2010.

      • South African Airways: Its Voyager frequent flier program contributed €36.9 million during the fiscal year ended 31 March 2010.

      • US Airways: Choice Seats, where consumers pay more to get a better seat in coach, provided €21 to €28 million in revenue during 2010. The carrier estimates this could be €141 to €211 million once it’s sold through all distribution channels.

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