US carriers see robust ancillary revenue picture in 2012

It is well known that ancillary revenues are high margin and the more ancillaries an airline fields, the more revenue it earns at a lower cost than operating an airline. Indeed, they have become critical to profitability given the fact that, in 2Q2011, US airline profits reached USD1.9 billion, of which USD1.4 billion was generated from ancillary revenues.

It is also well known analysts are worried that revenues, such as change fees, are declining. The continually pepper management during earnings calls regarding their plans for growing ancillaries. For their part, management only indicates it is working on new products.