Articles about IdeaWorksCompany

Nerdwallet

Seat selection fees have become more common for a reason — they drive a lot of revenue for airlines. Low-cost airlines Spirit and Frontier earned roughly half of their revenue from “ancillary fees” in 2020, according to a report by IdeaWorksCompany, an industry analytics firm.

The Independent

Since the rise of budget airlines such as Spirit and Frontier, U.S. airlines have dramatically shifted how they make money. Rather than earning profit margin on airfare itself, which is highly competitive, airlines are increasingly focused on “ancillary revenue” from add-on fees, credit card rewards programs and seat upgrades.  Between 2019 and 2021, ancillary fees as a percentage of total revenue for major U.S. airlines jumped six percentage points, from 16.1% to 22.2% , according to a report by IdeaWorksCompany, an airline industry reporting firm. That follows a steady drumbeat of increased fee revenue going back to at least 2007.

ConsumerAffairs

The newest airline ancillary revenue report is out and, boy, oh, boy, are the airlines making bank off of those little ancillary fees.  Adding together fees for baggage, seat selection, and boarding priority along with commissions gained from hotel bookings and the sale of frequent flier miles to partners, those cha-chings are on track to hit $102.8 billion worldwide in 2022, compared to $65.8 billion in 2021.  The report – prepared by CarTrawler, the leading provider of online car rental distribution systems, and IdeaWorksCompany, the foremost consultant on ancillary revenue, says there’s actually a double benefit of ancillary revenue: one that creates a stable income source for airlines while also contributing to lower fares for consumers.  “Airlines generate indirect and direct sales, such as buy-on-board meals and more leg room, from ancillary revenue activity. When customers use a co-branded credit card or book car hire at an airline website, this generates indirect revenue. Partners share a portion of the sales generated from these activities with an airline,” Jay Sorensen, president, IdeaWorksCompany, told ConsumerAffairs.

The Australian

An annual report on airline revenue from items such as baggage fees, seat selection, food and beverage and Wi-Fi, estimated carriers would rake in $152bn in 2022, compared with $162bn three years ago.  The figure worked out to about $26.50 a passenger on top of their airfare, up from $14.25 a decade ago.  The IdeaWorks Company report noted 45 per cent of airline passengers were now choosing to add services to their airfare, led by checked baggage and extra carry on, followed by seat selection, priority boarding, food and beverage and Wi-Fi.  Fees paid by frequent flyer program partners in return for rewarding customers with “points” were also incorporated into the headline $152bn figure.

Hospitalitynet

Airlines’ ancillary revenue ranges anywhere from 20 percent of total revenue for major airlines to 50 percent for low-cost carriers. According to IdeaWorksCompany, ancillary revenue totalled nearly $110 billion globally in 2019 and, despite dipping considerably in 2020, garnered more than $50 billion that year, rising to $68 billion in 2021. Most notably, ancillaries increased as a share of total global airline revenue in both pandemic years.

Travel Weekly

The Car Trawler Yearbook of Ancillary Revenue, undertaken by consulting firm IdeaWorks, found that in 2021 the average airline ancillary revenue per passenger was $29.96, up 39% from the 2019 average of $21.54 per passenger.  The study included 75 airlines that disclosed ancillary sales results for 2021. It includes sales of traditional ancillary products such as checked and carry-on bags, reserved seat assignments and WiFi, but also includes loyalty revenue, earned primarily by the sale of frequent flyers points to bank partners as part of co-branded credit card partnerships as well as other non-ticket revenues, such as commissions from rental car sales.

PhocusWire

Sales of add-ons drove an increase in revenue last year as airlines sought to recover pandemic losses.  Total ancillary revenue reached $48.4 billion in 2021 – up 54.2% from 2020, but 28% lower than 2019, a new study reveals.  Overall airline revenue rose 32% to $462 billion from 2020 to 2021. But 2021 still trailed 2019 revenue by about half, according to a report by CarTrawler, a B2B provider of technology solutions for the global travel industry.  The 2022 CarTrawler Yearbook of Ancillary Revenue, produced by IdeaWorksCompany, analyzes data from 75 international airlines.