Airline ancillary revenue projected to jump 11.3% in 2012 to USD36.1bn
Amadeus and IdeaWorksCompany released (29-Oct-2012) its worldwide estimate of ancillary revenue, which forecasts airline ancillary revenue in 2012 will increase 11.3% year-on-year to USD36.1 billion in new receipts. Amadeus senior VP distribution Holger Taubmann said it was "encouraging to see ancillary revenue growing at over 11% this year which demonstrates the significant commercial potential for airlines. However, to capitalize on this, it is imperative that airlines adopt a multichannel approach, accessing the opportunity presented by in-direct travel agency sales of ancillary services".
Ancillary revenue performance by airline category:
- Traditional airlines: Expected to earn USD12.8 billion in ancillary revenue in 2012, up 17%. This category represents a catch-all for the largest number of carriers. Ancillary revenue activity may consist of fees associated with excess or heavy bags and limited partner activity for a frequent flyer programme. The average percentage of revenue remained at 2.9%;
- Major US airlines: Expected to earn USD12.4 billion in ancillary revenue in 2012, down 0.8%. US-based majors generate strong ancillary revenue through a combination of frequent flyer revenue and baggage fees. The percentage of revenue for this group was 10.1%, which is a drop from the 2011 rate of 11.9%;
- 'Ancillary Revenue Champs': Expected to earn USD5.6 billion in ancillary revenue in 2012, up 30.5%. These carriers generate the highest activity as a percentage of operating revenue. The percentage of revenue achieved by this group was 19.7%, which is down slightly from 19.8% for 2011;
- Low-cost carriers: Expected to earn USD5.4 billion, up 12.8%. The percentage of revenue for this group was 7.2% and is above last year’s 6.5%.
Ancillary estimates by region: