Why the world’s airlines are not going broke
The importance of ancillary revenues – a la carte charges, commissions on travel-oriented services and the sale of frequent flier points – is driving airline revenues like never before.
What began as a trickle has grown to a flood.
The annual CarTrawler survey of global airline ancillary revenue shows growth to $31.5 billion for 2013, an increase of 1,200% since the first such survey in 2007.
IdeaWorksCompany researched the financial filings made by 114 airlines, 59 of which disclose ancillary revenue activity.
Ancillary revenue reported by airlines reached $16 per passenger in 2013, easily surpassing global figures for profit per passenger.
Ancillary revenue now provides the power to allow airlines to be profitable.
Tony Tyler, director general and CEO of IATA, said at a recent conference the world’s airline industry hopes to achieve a 2.4% average net margin for 2014, which is less than $6 per passenger.
Among the 59 disclosing carriers, 44 achieved ancillary revenue above $6, ranging from China Eastern at $6.43 to Jet2.com at $55.61 per passenger.
Ian Jarrett
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