Think non-core and get richer, Amadeus tells world’s carriers
Sunday, 18 Oct, 2010
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Travel technology supplier Amadeus is urging carriers to make more of their ancillary revenue opportunities by selling through high-yield travel agencies.
In a new report just published called Amadeus Guide to Ancillary Revenue, the technology supplier concludes that if airlines focused more on this area of making money then ancillary revenues could increase by as much as 300% to €74.8bn a year.
The report highlights Ryanair, Tiger Airways and Flybe as as airlines which are strong on ancillary sales. They make an average of 19.4% of operating revenue from add-on sales. Other strong performers are Easyjet, Air Asia X and United Airlines.
Just this week Easyjet settled a dispute with its founder Sir Stelios Haji-Ioannou over the use of the Easy branding for non-air product. Such was the importance of the issue for the airline that it handed Sir Stelios millions of pounds simply to be able to use it more freely on non-core products.
Commercial executive vice president at Amadeus Philippe Chérèque said ancillary revenues would rise this year to €18.4bn across the airlines that use its technology but hastened to add that this was just a fraction of operating revenue – a miniscule 5%.
He added: “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.
"This is difficult even when things are going smoothly. But when a flight is cancelled due to bad weather, an airline has to reaccommodate 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.”
He continued: “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.
“We expect the mobile channel to emerge as a significant platform for ancillary services sales. Travellers arriving early at the airport might be offered an hour in the premium lounge, for example. For a price, of course.”
“We expect the mobile channel to emerge as a significant platform for ancillary services sales. Travellers arriving early at the airport might be offered an hour in the premium lounge, for example. For a price, of course.”
by Dinah Hatch
Dinah
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