The world's airlines stand to collect about $22.6 billion in
ancillary revenue in 2010, compared with about $13.5 billion last year,
according to a guide released by Amadeus and IdeaWorks.
A big factor in the increase: Airlines have begun selling
ancillary services through travel agencies, said Amadeus.
Carriers are just skimming the surface of revenue potential,
the guide contends.
"At Amadeus, we expect to see ancillary revenues grow
significantly as airlines are only now beginning use the high-yield travel
agency channel to sell their range of ancillary services," said Philippe
Chérèque, Amadeus' executive commercial vice president. "Amadeus is
talking to a number of airlines to help them with this."
Chérèque pointed out that the amount Amadeus and IdeaWorks
predict the airlines will collect is less than 5 percent of the operating
revenue generated by airlines.
Airlines could increase ancillary revenue by as much as 300
percent if they get aggressive like Allegiant and Spirit, Chérèque said.
The airlines' extra fees have created some backlash,
especially in the United States, where lawmakers have proposed legislation that
would curb add-on charges and force airlines to reveal the all-in cost for
Amadeus officials acknowledge that achieving transparency
has proved difficult, but that it is in airlines' best interests to do it.
"As ancillary services represent an ever-larger
proportion of revenue and add more and more layers of complexity to the airline
offer, it is vital that airlines consider the end-to-end process of selling,
fulfilling and delivering ancillary services," Chérèque said.
"This is difficult even when things are going smoothly.
But when a flight is canceled due to bad weather, an airline has to
re-accommodate a plane full of passengers, each with their own combination of
assigned seats, in-flight entertainment, additional bags and preferred meals.
Successfully translating ancillary revenue into additional profit rests on an
airline's ability to manage such situations efficiently."
Still, passengers appear to be accepting many of the extra
fees as part of their flight cost, and airlines will continue to look for even
more revenue sources.
"The numbers for 2010 will certainly increase,"
Amadeus said. "Each airline category will likely achieve a higher
percentage as a la carte pricing methods are perfected and become more
pervasive. For example, coordination among alliance partners has compelled
Europe-based airlines to adopt baggage charges on codeshare transatlantic
The guide cites some specific examples of ancillary
● AirAsia provides 10 pre-flight entree choices at its
● Continental implemented flexible pricing for seating with
extra legroom. When demand rises, so does the price.
● EasyJet offers early boarding for 12 months through its
EasyJet Plus membership card.
● KLM is testing a meal program that enables customers to
place an order before their flight. The option is available on eight long-haul
routes from Amsterdam, including Calgary, Dubai and Sao Paulo.
Technology provides even greater opportunity for ancillary
revenue streams, Chérèque said.
This report originally
appeared on TravelWeekly.com.