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Ancillary fees — the extra fees passengers pay for baggage, premium seats and others — is now one of the biggest revenue drives for the global airline industry, so much so that it has almost single handedly been responsible for airlines having a great 2013. In 2012, global airlines collectively reported about $27.1 billion in ancillaries, up about 20 percent from 2011, a huge jump by any standards in a mature industry.
But which airlines are the most dependent on these extra fees for their overall revenues? The latest IdeaWorksCompany’s CarTrawler Review of Ancillary Revenue Results for 2012 study gives us the numbers, and low cost airlines dominate the top list, for obvious reasons: extra fees is how they make their money, on top of low-cost-no-frills basic service.
Worldwide, Spirit Airlines maintained its top position in this list with a nearly 10 point lead over its closest low-cost peer. Detractors and complainers be damned, consumers continue to choose the carrier’s “ultra low cost” methods: traffic is up more than 22 percent and load factors were virtually unchanged for 2012 compared to the prior year.
There are good lessons to be learned from the next two airlines on the list:
Holding the 2nd and 3rd spots on Table 2 are two carriers that concentrate on bundling holiday package components with the sale of tickets. Allegiant thinks of itself foremost as a vacation package company and secondly as an airline. Jet2.com placed new a la carte focus during 2012 on the packages sold through Jet2Holidays brand. Carriers wishing to break through the 25% barrier might consider more emphasis on holiday vacation sales.
Allegiant and Jet2.com have undoubtedly tapped a repeat source of leisure client support by becoming the “go-to brand” for holidaymakers…be it a flight from Laredo to Las Vegas on Allegiant or Leeds to Lanzarote on Jet2.com.
Top 10 Airlines – Ancillary Revenue as a % of Total Revenue
|Airline||Annual Results – 2012||Airline||Annual Results – 2011|
|AirAsia X||18.7%||AirAsia Group||17.8%|
|AirAsia Group||18.2%||AirAsia X||16.5%|