September 9, 2013, Shorewood, Wisconsin – Ancillary revenue totaling more than $27.1 billion is now produced by every type of airline and in every region of the world. The first IdeaWorks ancillary revenue report in 2008 identified $2.45 billion, from just 23 airlines, in this then-new area of sales.
The consistent growth of extra revenue from three key sources demonstrates how this activity has become a crucial component of airline income. Carriers worldwide rely upon the revenue from frequent flier activities, a la carte features, and commission-based products, to create profits in an era of high fuel costs--while keeping fares modest in a recession-weary world.
The new 2013 CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany, now available free online, provides the most detailed global assessment of a bottom-line-booster that can represent more than 38 percent of a carrier’s revenue. The full 80-page report examines 53 airlines that disclosed revenue during 2012 from activities such as frequent flier miles sold to partners, fees for checked bags, and commissions from car rentals.
Some airlines are vague in their descriptions and merely provide an “ancillary revenue” line on the income statement without further details. Some of the carriers don’t specifically list ancillary revenue, but describe qualifying activities such as “revenue from the sale of frequent ?ier miles to partners” or “revenue from onboard cafe sales.” Other airlines provide robust details and seem very proud of their ancillary revenue accomplishments.
The following is a sampling of the ancillary revenue details found in the Yearbook:
- Air Berlin. The carrier realized income of €184.4 million (not revenue) from its topbonus frequent flier program during 2012.
- KLM. Economy comfort seating contributes €65 million annually on transcontinental routes.
- Ryanair. IdeaWorksCompany estimates 18 passengers pay for assigned seating on a typical flight.
- Vueling. The carrier generates ancillary revenue through the licensing of its brand to a hotel
- in Barcelona. Hotel Vueling BCN by HC (Hoteles Catalonia) opened March 2013.
- Norwegian. The airline owns a portion of Norwegian Finans Holding ASA which operates as Bank Norwegian. During 2012 the bank paid commissions of NOK 40,049,000 ($6.9 million) for activity related to the Bank Norwegian Visa card.
- Southwest. EarlyBird boarding provided $161 million for 2012.
- SpiceJet. Buy-on-board contributed INR 278.81 million ($4.9 million) to 2012 revenues.
- United. Total cash proceeds from frequent flier miles sold for 2012 was $2.852 billion.
The 2013 CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany was released
as a free-of-charge report sponsored by CarTrawler. The full report is available at the IdeaWorks web site: www.IdeaworksCompany.com.
Airlines rake in $22 billion in ancillary fees
As jet-fuel prices soar and Delta battles to lift itself from bankruptcy protection, members who cherish their SkyMiles have a lot of worries.
Revenue from fees charged to passengers to check their bags climbed to $769 million compared with $578 million collected in the first quarter of last year.
Eight small airlines over the past year have quietly begun programs that include some innovative wrinkles.