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Airlines are pushing ancillaries to boost revenue, but new offerings slow to come

October 11, 2024

PhocusWire

Last year, total airline revenue exceeded pre-pandemic results hitting $918 billion, according to the recently published 2024 CarTrawler Yearbook of Ancillary Revenue. Ancillary services played a role in that growth, with passengers increasingly willing to pay for options to personalize their experience – elements such as more legroom, early boarding or checked baggage. According to the CarTrawler report, 57 airlines together saw a $7.4 billion rise in ancillary revenue in 2023, a more than 25% increase over 2022 – which was already up 50% over 2021.

Report: 2023 Ancillary Airline Revenue ‘Surges’ Over ’19 Levels

September 25, 2024

Business Travel News

The airlines with the most ancillary revenue in 2023 collected $54.1 billion, which “is far in excess” of the $38.4 billion result for the top 10 carriers for 2019, according to a new IdeaWorksCompany report, released Tuesday. The company used financial statements, annual reports, analyst research and investor relations presentations for 68 airlines to produce the 2024 edition of the CarTrawler Yearbook of Ancillary Revenue. Among those, 57 carriers appeared in last year’s publication and were used in year-over-year comparisons.

Southwest’s free checked bag policy was just put into question

July 27, 2024

San Francisco Chronicle

The research firm IdeaWorks estimated recently that airlines worldwide bring in annual baggage fee revenues totaling $33.3 billion and noted that Southwest is the sole outlier among major U.S. carriers in not charging them. Federal statistics show that in 2023, baggage revenue was $1.3 billion for American, $1.2 billion for United, and $985 million for Delta.

Driving growth with airline ancillaries

June 10, 2024

Mastercard

In late 2023, travel industry firms CarTrawler and The IdeaWorks Company projected that airline ancillary revenue would increase to $117.9 billion worldwide for 2023. That would represent a 275% increase over ancillary revenues in 2013, which were $31.5 billion. While ancillaries are growing overall, ancillaries per passenger ticked down in 2023 significantly. In 2024 and beyond, airlines will focus on maximizing ancillaries per person. Although other factors such as increases in average ticket price can influence customer behavior, it’s important to keep a special focus on ancillaries.

United is making a digital-advertising push

June 7, 2024

Crain’s Chicago Business

Traditionally, advertising hasn’t been much of a focus for airlines, says Jay Sorensen, president of IdeaWorks, a consulting from outside Milwaukee that tracks ancillary revenue. “Every once in a while, I’ll come across a carrier making a big push on this,” he says. “They tend to come and go. It’s not an easy thing. They’ve got to be really dedicated to have it work. I haven’t seen airlines do it well for a sustained period.”

How airline “drip pricing” can disguise the true cost of flying

April 24, 2024

CBS News

Jay Sorensen, president of IdeaWorks, a consultancy that has advised U.S. airlines, agrees that drip pricing makes comparing airline ticket prices more complicated. But he still thinks it can benefit consumers by letting them pay for the extras they want, while leaving behind those that aren’t important to them. “The outcome is of course that it’s more difficult to compare between different products and airlines,” he said. “While that’s true, airlines, as profit-seeking companies, are under no obligation to make it easier to compare with their competitors.” Sorensen compared the experience of booking airfare today to shopping for groceries. “You roll in with your shopping cart, and as you walk through the aisles you toss stuff in your cart,” he said. “You buy a base fare, and as you go through the booking path you add things to the cart, like a checked bag, seat assignment, or pay to book a meal or other services,” he said. “That’s dramatically different from the way travel was once sold in U.S.”

American Airlines Is Once Again Changing How Fliers Can Earn Rewards

April 23, 2024

Wall Street Journal

The lowest-priced reward flight with American on average was 25% cheaper in 2024 compared with five years earlier, according to airline-consulting firm IdeaWorks. Comparatively, the price of a rewards flight, in miles or points, across all of the carriers studied rose 28% on average since 2019. The IdeaWorks analysis was based on 600 flight inquiries conducted in March for travel between June and October. The queries searched for the lowest-price fares for certain routes across six carriers: American, United Airlines, Delta, Southwest Airlines, JetBlue and Alaska Airlines.

There is a reason it’s costing more travel miles to get the same flight

April 5, 2024

The Street

If you recently tried to book a flight with points or frequent-flyer miles, you might have noticed that not only cash prices have jumped significantly. The “they want how much for that flight?” feeling is confirmed by data — IdeaWorksCompany, a consulting firm analyzing airline revenue, calculated that the average price of a plane ticket purchased with miles rose by 28% between 2019 and 2024, or 7% more than the 21% inflation of the U.S. Consumer Price Index during the same time period. “Mileage/point prices have climbed 28% overall since the last survey five years ago,” write the study’s authors. “[…] The primary reason is the larger flow of miles/points from co-branded credit card accrual, which created more demand and prompted airlines to increase reward prices.”

It’s been harder to accumulate miles but this airline has the best reward redemption rate

April 4, 2024

USA Today

Airline reward tickets are getting more expensive. While cash fares for flights are rising slower than inflation, a new report from IdeaWorksCompany, a consultancy focusing on ancillary airline revenue, shows that reward redemptions are getting even pricier than paid-for tickets. According to the analysis, airline reward ticket prices have increased 28% on average in the last five years, while the Consumer Price Index rose 21% over that same period. The survey was based on 600 fare queries at six different U.S. airlines.

Airlines made US$33 billion from baggage fees worldwide last year, and they could make even more this year

February 28, 2024

South China Morning Post

Airlines made US$33 billion from baggage fees worldwide last year, and they could make even more this year. Last year’s estimate is up almost 15 per cent from 2022, and it’s the first time it’s crossed US$30 billion since before the pandemic. Carriers could be set to make even more this year, as several US airlines have upped their checked bag fees. Baggage fees alone were worth an estimated US$33.3 billion to airlines last year. That’s according to a report from IdeaWorksCompany, a consultancy for airline ancillary revenues, and car rental firm CarTrawler.

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