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Airlines collect $40bn in ancillary revenue

Airlines collected $40.5 billion in ancillary revenue in 2015 comprising 8.7 per cent of total sales, a study from Idea Works Company and Car Trawler has found.

Analysing 67 global carriers, the research showed that United topped the list of revenue made by ancillaries last year with $6.2 billion. This was followed by American ($4.7bn), Delta ($3.7bn) and Air France/KLM ($2.1bn).

The amount of money made by airlines through sales such as seat selection, in-flight meals and priority boarding has jumped significantly – In 2008 American was the highest earner with $2.2bn in sales followed by United ($1.6bn) and Delta ($1.5bn).

The report defines ancillary revenue as: “Revenue beyond the sale of tickets that is generated by direct sales to passengers, or indirectly as a part of the travel experience.”

The annual ancillary revenue study also showed how certain airline rely heavily on this income with ancillaries at low-cost US airline Spirit accounting for 43 per cent of total revenue or $51.80 per passenger.

The survey covers airlines that disclosed revenue in 2015 financial filings from activities such as frequent flier miles sold to partners, fees for checked bags, and commissions from car rentals

As one of the first products purchased for any journey, airlines have privileged access to customer travel itineraries before anyone else does,” said Car Trawler, chief commercial officer, Michael Cunningham.

“In order to capitalise on this competitive advantage, airlines need to ensure they maintain ownership of their customer relationship and utilise the valuable data they already have access to, enabling them to act like a responsive travel assistant.

“By offering their customers timely ancillary add-ons, they have the ability to become a one-stop shop for travel - driving brand loyalty, revenue, and profit,” said Cunningham.

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