October 29 2013  |  Catering

Firms peg global ancillary revenue at US$42.6 billion

By Rick Lundstrom

Global ancillary airline revenue in 2013 will be a full 6% of total airline revenue or approximately US$42.6 billion, according to a study released by the consultancy firm IdeaWorks and CarTrawler, an Ireland based provider of online car rental distribution systems.

The worldwide ancillary revenue is a 17.9% increase from the previous year and an increase of 89% since 2010, said a release on the study.

It is the fourth year IdeaWorks, based in Shorewood, Wisconsin, prepared a global projection of ancillary revenue. Earlier this year, the two companies reported ancillary revenue from 53 airlines. The statistics were applied to a list of 176 airlines to give the global projection.

This is the first time the company projected revenues specifically from a la carte fee activity. That category includes sale of food and beverage, checked baggage, premium seat assignments and early boarding. Combined, those fees produce an estimated US$23.7 billion of the projected global total. The remaining US$18.9 billion comes from non-fee activity such as sale of frequent flier miles to program partners and commissions earned on the sale of services to travelers, such as hotel rooms and car rentals.

Traditional or legacy carriers and U.S. major airlines accounted for $28.9 billion of the total revenue. Airlines termed “ancillary revenue champs” accounted for $7.5 billion. Among those are airlines with the highest percentage of operating revenue derived from ancillary sales. Examples include AirArabia, Jetstar, Germanwings and Spirit. Low-cost carriers accounted for $6.2 billion in ancillary revenue.

“Approximately 40% of the $42.6 billion ancillary revenue increase for 2013 can be explained by a global airline industry that is producing better revenue results and carrying more passengers,” said the release. “The remaining 60% amount is being delivered by more effective and aggressive ancillary revenue efforts by Ancillary Revenue Champs, Low Cost Carriers, and Traditional Airlines.”

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