FULL-SERVICE airlines are flying in to capture a slice of the lucrative ancillary pie as it continues to grow, but kinks in how such products are distributed still need to be ironed out.
According to an analysis by IdeaWorksCompany and CarTrawler, global ancillary revenue is estimated at US$42.6 billion in 2013, up from US$36.1 billion in 2012 and almost double the US$22.6 billion collected in 2010.
Ancillaries will account for six per cent of total airline revenue in 2013, up from 5.4 per cent in 2012, they predicted.
John Chapman, chief commercial officer, Jet Asia Airways, said: “(Full-fledged carriers) have not been that great at offering ancillaries which is something that the LCCs have been doing very well but this has to be our goal if we want to increase our revenue.
“We cannot miss out on the opportunity for additional revenue, but at the same time we do not want to devalue the full product that we already offer. Some ancillary items that we are now looking to offer could be lounge passes, early boarding privileges and exit row seats,” he said.
Jay Sorensen, president, IdeaWorksCompany, said: “A la carte activities, such as those linked to fees charged for checked bags, on-board cafes and early boarding privileges, are a big part of the ancillary revenue story.”
Noting that Delta Air Lines’ “economy comfort seats” are its best-selling ancillary item, Chris Phillips, managing director – distribution strategy, said many travellers are willing to fork out more for extra legroom, a later boarding time and a chance to sit at the front of the plane.
The same analysis reported that slightly more than half of global ancillary revenue is sold to consumers via airline websites, onboard, and increasingly through travel consultants and OTAs.
Despite rising demand for ancillary items, Mario Kriebel, vice president commercial payment solutions, BCD Travel, pointed out that GDSs only offer certain ancillary products at present, resulting in travel consultants having to operate outside of the system.
He cited the example of airport limo pick-up not being available through the GDS. “We definitely need the ability to book these items now because travellers are expecting them already.”
Delta Air Lines’ Chapman said: “The challenge now is to help differentiate airlines’ products in a seamless manner to the travellers.”
