Airline ancillary revenue projected to be $82.2 billion worldwide in 2017
Research projects that airline ancillary revenue will have a 264% increase from the 2010 figure of $22.6 billion; a la carte pricing delivers an increase of nearly $15 billion.
IdeaWorksCompany, the foremost consultancy on airline ancillary revenues, and CarTrawler, the leading provider of online car rental distribution systems, project airline ancillary revenue will reach $82.2 billion worldwide in 2017. The CarTrawler Worldwide Estimate of Ancillary Revenue represents a 264% increase from the 2010 figure of $22.6 billion.
Worldwide effort delivers an increase of nearly $15 billion for 2017.
With few exceptions, airlines all over the world are moving to a la carte methods to provide more choices for consumers while boosting ancillary revenue. The pace of ancillary revenue activity quickens when major alliance members, such as Air France/KLM, American, Lufthansa, Qantas, and United embrace ancillary revenue methods. The changes have a ripple effect through the oneworld, SkyTeam, and Star Alliances which encourages member airlines to adopt the same methods to smooth commercial and operational connections.
This partially explains why the largest share of the 2017 increase came from the world’s traditional airlines at $6.1 billion, which was 41% of the total increase.
Fare bundles that provide more flexibility, better seating, and fast track service at airports have been developed to lure commercial customers from traditional airlines. In addition, frequent flyer program benefits are now a common feature for airlines in this category, such as those offered by AirAsia, Frontier, Jetstar, Norwegian, Pegasus, and Spirit.
IATA predicts nearly 4.1 billion passengers will spend $776 billion worldwide on air transport for 2017.Applying the global ancillary revenue estimate to IATA’s statistic yields a result of $20.13 per passenger.
A la carte pricing magnifies the power of the marketplace to reward good value and punish bad products. This year’s global increase illustrates that principle admirably.
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