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Airlines' total global ancillary revenue, $49.9 billion in 2014, has increased each year since 2010, when total global ancillary revenue was estimated at $22.6 billion, less than half of this year's projection.

Major airlines will likely capture more ancillary revenue than other sectors of the airline industry in 2014.

Carriers focusing on a la carte ancillary revenue from more legroom or early boarding will likely drive overall global ancillary revenue this year, more than sales of frequent flyer miles and commissions from hotel recommendations and car rentals.

IdeaWorks projects total global ancillary revenue will be $49.9 billion for 2014, 6.7% of the total projected airline revenue of $746 billion.

Of the estimated $49.9 billion, $28.5 billion will likely come from a la carte services, while the smaller portion, $21.4 billion, will likely come from sales of frequent flyer miles.

This total global ancillary revenue number has increased each year since 2010, when total global ancillary revenue was estimated at $22.6 billion, less than half of this year’s projection.

Major airlines such as Etihad and Lufthansa, for example, however, will see more overall ancillary revenue than low cost carriers and most of their revenue will come from the sale of frequent flyer sales than a la carte services, while low cost carriers will see more revenue from the the la carte category.

IdeaWorks also estimates traditional airlines will have the highest amount of frequent flyer miles sales and commission-based revenue, $10.5 billion. Low cost carriers will have the lowest amount of frequent flyer miles sales, around $400 million, and the lowest amount of overall ancillary revenue, $7.7 billion. Low cost carriers generating the highest ancillary revenue percentage of the total operating revenue, such as Allegiant and Pegasus, for example, will have the highest amount of a la carte sales at $8.8 billion, with major U.S. airlines at the bottom with $4.3 billion.

These projections are based on updates from earlier IdeaWorks reports this year with total ancillary revenue from 2013, and now include 180 airlines, three times as many airlines than the 59 initially making revenue disclosures available.

Percentages of total airline revenue that ancillary services account for saw little change year-over-year. Traditional airlines, major U.S. carriers, champs and low cost carriers all saw increases of 2% or lower.

It’s no coincidence that champs and other low cost airlines also have the highest percentages of ancillary revenue, as 23.6% of champs and 12.1% of low costs total revenue is from ancillary fees. These airlines, like Spirit and Ryanair, generally rely on ancillary fees to make a profit which aligns with their brands.

Ancillary services are increasingly popular ways to boost revenue, though some airlines struggled with these this year, particularly with mobile ancillary sales.

CarTrawler Worldwide Estimate of Ancillary Revenue – by Carrier Type for 2014

Airline Category Total Ancillary Revenue Frequent Flier & Commission Based A la Carte Activity
Traditional Airlines $17.5 billion $10.5 billion $7.0 billion
US Major Airlines $15.4 billion $10.0 billion $5.4 billion
Champs $9.3 billion $0.5 billion $8.8 billion
Low Cost Carriers $7.7 billion $0.4 billion $7.3 billion
Worldwide Totals $49.9 billion $21.4 billion $28.5 billion

Source: CarTrawler

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Tags: ancillary revenue, fees, money

Photo credit: Southwest touts its Wi-Fi and onboard entertainment for use on travelers mobile devices. Southwest Airlines

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