Airline ancillary revenue is on track to reach an all-time high this year, with the latest forecast projecting as much as $82.2 billion worldwide, according to a new study from IdeaWorksCompany and CarTrawler Worldwide.
The number is a hefty increase of 264 percent over $22.6 billion in 2010, when the first estimate of ancillary revenue tallied at $22.6 billion. It also represents a 22 percent increase over 2016’s estimated $61.4 billion.
The 2017 figure – which includes revenue generated from hotel bookings, frequent flier programs and a la carte services - represents 10.6 percent of the total $776 billion price tag of air transport.
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Notably, a la carte activity accounts for $57 billion of the ancillary total – indicating airlines are investing in these services to provide more options to consumers.
Specifically, the pace of adoption led by major alliance members such as Air France/KLM, American and Lufthansa has a "ripple effect" through the likes of Oneworld, SkyTeam and Star Alliance to encourage consumers to embrace similar purchase patterns.
In part this explains why the biggest share of the 2017 increase comes from traditional airlines - defined here as a general category for the largest number of carriers - at $6.1 billion.
Airlines that take an a la carte approach - for example throughout North America, Europe and Australasia - typically find that more than 50 percent of passengers opt for higher-priced bundles. Thus as more airlines follow suit, ancillary revenues rise by billions.
The report also suggests that increased push for ancillary revenue performance via booking sites, mobile apps and travel agency distribution networks will result in even higher airline profits in 2018.
"These figures indicate that ancillary profits are on a prolonged, upward trajectory and we are delighted to see more airlines looking further than traditional ancillary sources," says Aileen McCormack, CarTrawler's chief commercial officer.