Airline ancillary revenue projected to reach $92.9 billion in 2018
IdeaWorksCompany and CarTrawler project airline ancillary revenue will reach $92.9 billion worldwide in 2018. The CarTrawler Worldwide Estimate of Ancillary Revenue represents a 312% increase from the 2010 figure of $22.6 billion, which was the first annual ancillary revenue estimate.
Earlier this year, CarTrawler and IdeaWorksCompany reported the ancillary revenue disclosed by 73 airlines for 2017. These statistics were applied to a larger list of 175 airlines to provide a truly global projection of ancillary revenue activity by the world’s airlines for 2018. The CarTrawler Worldwide Estimate of Ancillary Revenue marks the ninth year IdeaWorksCompany has prepared a projection of ancillary revenue activity.
Ancillary revenue is generated by activities and services that yield cashflow for airlines beyond the simple transportation of customers from A to B. This wide range of activities includes commissions gained from hotel bookings, the sale of frequent flyer miles to partners, and the provision of a la carte services − providing more options for consumers and more profit for airlines.
“Nearly $93 billion in revenue indicates that good merchandisers are selling products desired by a vast number of customers. IATA estimates more than 4.3 billion travelers will depart on flights in 2018. Most of them now have the choice of paying a little extra for more comfort and convenience – thus providing airlines with a golden opportunity to build and strengthen their customer experience in the long-term,” said Aileen McCormack, Chief Commercial Officer at CarTrawler.
Analysis performed by IdeaWorksCompany during the past eight years reveals natural airline groupings (or categories) based upon a carrier’s ability to generate ancillary revenue. The “percentage of revenue” results associated with four defined categories have been applied to a worldwide compilation of operating revenue disclosed by 175 airlines.
CarTrawler Worldwide Estimate of Ancillary Revenue – by Carrier Type for 2018
Airline Category Total Ancillary Revenue Frequent Flyer & Commission Based A la Carte Activity
Traditional Airlines $36.8 billion $11.0 billion $25.8 billion
US Major Airlines $26.9 billion $15.6 billion $11.3 billion
Ancillary Revenue Champs $20.2 billion $1.0 billion $19.2 billion
Low Cost Carriers $9.0 billion $0.5 billion $8.5 billion
Global Totals $92.9 billion $28.1 billion $64.8 billion
Source: 2017 ancillary revenue statistics extrapolated by IdeaWorksCompany to 2018 IATA global airline revenue prediction.