Global airline ancillary revenue will close in on $100B in 2018

Airline ancillary revenue is forecast to hit $93 billion in 2018, according to the latest report by IdeaWorksCompany and CarTrawler.

The figure represents a 13% increase on 2017’s total of $82.2 million, which was a significant increase on 2016’s figure of $67.4 billion.

According to the report, continued growth in the global airline industry accounts for 67% of the ancillary revenue increase in 2018.

The CarTrawler Worldwide Estimate of Ancillary Revenue divides airlines into four categories - traditional carriers, U.S. carriers, low-cost carriers and ancillary revenue "champs."

Traditional carriers, who are mainly collecting revenue from excess baggage, extra leg room and frequent flyer partner activity, did not see see any change in average percentage of revenue. 

It was a similar story for U.S. carriers who generate ancillary revenue through frequent flyer mileage sales and baggage fees.

Standouts

The better performers were ancillary revenue "champs," who saw a 3% increase in average percentage of revenue, while for LCCs, it increased just under a percentage point.

Initiatives from a number of airlines in these categories, such as Air Asia’s dynamic pricing and EasyJet’s invitation-only Flight Club, are highlighted in the report as helping to boost ancillary revenue for the year.

For traditional carriers, initiatives around basic economy fares that encouraged travelers to trade up also helped increase revenue.

One interesting element is that global ancillary revenue now accounts for 10.7% of total airline revenue compared to 4.8% in 2010.

And, if frequent flyer activity is removed and just the a la carte portion of the rate measured, ancillary revenue is 7.4% of the total compared to 2.6% in 2010.

The report also looks at IATA’s predicted figure of air transport spend of $871 billion by 4.3 billion passengers in 2018 to reveal an ancillary revenue estimate of $21.32 per passenger.