Airlines increase ancillary revenue

A new report from Shorewood-based airline consultant IdeaWorksCompany shows the ancillary revenue reported by airlines grew to $22.6 billion in 2011, up 66 percent from 2009.

The report, conducted in cooperation with Madrid-based travel technology firm Amadeus, reviewed the financial filings of 108 airlines worldwide, 50 of which disclose ancillary revenue. The category has become a priority for many airlines in the industry.
“We’ve seen the industry move swiftly to grasp some clear opportunities for providing ancillary services, such as baggage fees, extra legroom and on-board catering. The next wave of innovation in ancillary services will come from those airlines which develop new products that support their brand positioning and deliver value to the traveler by meeting their individual needs and preferences,” said Holger Taubmann, senior vice president of distribution at Amadeus. “A multi-channel approach to the distribution of ancillary services is key to realizing this. Amadeus is working with the 46 airlines that have signed up for Amadeus Ancillary Services Solution to deliver an offer that will tailor the travel experience and provide new revenue sources, now and in the future.”
The top ancillary revenue earners were United Continental, Delta, American, Qantas Airways and Southwest. United Continental brought in $5 billion last year in ancillary revenue.
“Our first report into ancillary revenue was issued in 2007, when only 23 airlines worldwide disclosed ancillary revenue activity in financial filings, and the result was a modest ($2.45 billion). Four years later, 50 airlines today disclose ancillary revenue activity of ($22.6 billion). It’s clear that airlines recognize the importance of ancillary revenue and are developing increasingly innovative ways to generate this,” said Jay Sorensen, president of IdeaWorksCompany.

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