Airline ancillary revenue up by nearly 200% in just six years, says new report

Airline ancillary revenue up by nearly 200% in just six years, says new report

DUBLIN — Airline ancillary revenue is estimated to reach US$67.4 billion worldwide in 2016, an increase of nearly 200% from 2010.

According to the CarTrawler Worldwide Estimate of Ancillary Revenue by CarTrawler and IdeaWorksCompany, ancillary revenue was only at $22.6 billion in 2010, which was the first year for the estimate.

Revenue from optional services such as onboard sales of food and beverages, checked baggage, premium seat assignments and early boarding benefits was determined to represent $44.9 billion of the projected global 2016 total. The smaller share, at $22.5 billion, comes from non-fee activity such as the sale of frequent flyer miles to program partners, and commissions earned on the sale of ground-based services to travellers, like hotel accommodations and car rentals.

Earlier this year, the two companies reported the ancillary revenue disclosed by 67 airlines for 2015. These statistics were applied to a larger list of 178 airlines to provide a truly global projection of ancillary revenue activity by the world’s airlines in 2016. This year’s Revenue marks the seventh year IdeaWorksCompany has prepared a projection of ancillary revenue activity.

“Successful ancillary revenue generation is dependent on offering customers the right product at the right time, often before they have even asked for it. Amazon has proven to great effect the positive impact that data science has had on its business with an estimated one-third or total sales now coming via their recommendation algorithm,” said Aileen O’Mahony, Chief Commercial Officer at CarTrawler. “As with Amazon, the unlocking of data-driven insights is enabling airlines to propose ancillary products and services to their customers in an increasingly sophisticated way.”

O’Mahony went on to say that this application of data is fuelling the continued growth of the sector, while at the same time “unearthing further potential for building loyalty by identifying when, how, where and what to offer customers when they visit your website or app.”