Airlines look to take flight with lucrative extras
Just as passenger anger rises over airline charges and customer service, the world’s leading carriers are squeezing more money out of fees on everything from baggage, food to hotel bookings. Over the past decade, so-called ancillary fees have experienced huge growth. The top 10 airlines, ranked by total ancillary revenue, generated $2.1bn in 2007. In 2016, this had grown to more than $28b, according to research by IdeaWorksCompany and CarTrawler. Among the most successful groups at selling ancillary services are United, which generated $6.2b in revenue last year, Delta, which generated $5.17b, and American, which generated $4.9b. Globally airlines are estimated to have earned $67.4b of income from ancillaries last year, representing about 9.1% of airline revenue for 2016, up from 4.8% in 2010. It is not a new trend. Ancillary fees have been creeping in across the whole airline industry as carriers search for ways to make up for lost revenue from falling ticket prices. But airlines have become more inventive over charging for services other than the ticket price. Activities include anything from frequent flyer miles, bidding for spare seats next to you, on-time guarantees, lounge access to hotel bookings, holidays and car hire. “Airline management teams have clearly identified ancillary revenues as a way to add incremental, high-margin revenue to the core seat product offer,” says Anand Date, aviation analyst at Deutsche Bank. However, it has raised scepticism from some within the industry who argue that the majority of these fees are for things flyers used to get for free and are therefore hidden fare increases.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2017-09-20/general/airlines-look-to-take-flight-with-lucrative-extras
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Airlines look to take flight with lucrative extras
Just as passenger anger rises over airline charges and customer service, the world’s leading carriers are squeezing more money out of fees on everything from baggage, food to hotel bookings. Over the past decade, so-called ancillary fees have experienced huge growth. The top 10 airlines, ranked by total ancillary revenue, generated $2.1bn in 2007. In 2016, this had grown to more than $28b, according to research by IdeaWorksCompany and CarTrawler. Among the most successful groups at selling ancillary services are United, which generated $6.2b in revenue last year, Delta, which generated $5.17b, and American, which generated $4.9b. Globally airlines are estimated to have earned $67.4b of income from ancillaries last year, representing about 9.1% of airline revenue for 2016, up from 4.8% in 2010. It is not a new trend. Ancillary fees have been creeping in across the whole airline industry as carriers search for ways to make up for lost revenue from falling ticket prices. But airlines have become more inventive over charging for services other than the ticket price. Activities include anything from frequent flyer miles, bidding for spare seats next to you, on-time guarantees, lounge access to hotel bookings, holidays and car hire. “Airline management teams have clearly identified ancillary revenues as a way to add incremental, high-margin revenue to the core seat product offer,” says Anand Date, aviation analyst at Deutsche Bank. However, it has raised scepticism from some within the industry who argue that the majority of these fees are for things flyers used to get for free and are therefore hidden fare increases.<br/>
