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Airlines continue to find ways to increase ancillary revenue

September 29, 2022

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.

Ancillary Sales Drive Pandemic Recovery for Many Airlines

September 27, 2022

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.

Ethiopian becomes a tour broker

August 9, 2022

FVW Travel Talk

The revenue from additional offers already makes up a large part of the sales cake for many airlines. Ethiopian Airlines now also wants to benefit from this – and is now arranging offers from Get Your Guide. According to a regular study by Idea Works Company on the additional revenues of airlines, in 2021 the airlines averaged 27.60 US dollars per passenger. In 2019, before the corona pandemic, the value was USD 23.91 per airline.

How the value-based distribution model can drive NDC adoption

July 20, 2022

BTN – Business Travel News Europe

Industry reports have revealed that the revenue earned by airlines in ancillary fees has been increasing every year. It was estimated at $65.8 billion in 2021 according to the IdeaWorksCompany and CarTrawler annual airline ancillary revenue report, and that’s still a way off from the $100 billion airlines were expected to reach in ancillary revenue in 2019. Average ancillary revenue per passenger for 2021 was predicted to be $27.60 and some carriers posted increases of more than 50 per cent in ancillary revenue per passenger for the first half of last year.

Supplément bagages, choix du siège: comment le Covid a dopé les options payantes des compagnies aériennes

June 17, 2022

Les Echos (France)

Trois exemples qui n’ont rien de cas isolés. En 2021 déjà, le rapport annuel CarTrawler/IdeaWorksCompany, consacré aux recettes annexes du transport aérien, avait identifié quatre compagnies low cost dont plus de 50 % du chiffre d’affaires était désormais constitué par ce qui était autrefois l’accessoire (l’européenne Wizz Air, les américaines Spirit et Allegiant et la mexicaine Viva Aerobus) et neuf au-delà des 30 %. En moyenne, la part des recettes annexes est passée de 12,2 % à 14,4 % du chiffre d’affaires des compagnies aériennes, tous secteurs confondus, selon CarTrawler/IdeaWorks – soit 65,8 milliards de dollars en 2021.

Airlines’ Premium-Economy Trick

May 29, 2022

The Atlantic

A recent report by Jay Sorensen, an industry consultant, noted that “the apparent discovery of a new type of upscale leisure traveler” is a welcome surprise for these airlines. It connoted a small miracle: Airlines had once again wrung a new social class from flying, as they had done with first and business class. And they were able to do it, in part, because of a phenomenon called “pain of payment.”

Business travel may never fully recover, as companies like McKinsey make permanent cuts to trips.

March 29, 2022

New York Times

Climate pledges are another factor that could permanently reduce corporate travel, according to a report released Tuesday by IdeaWorks, a corporate travel consulting firm. The report said because corporate travel represented a large portion of professional service firms’ carbon footprints, many will not be able to meet their climate goals without a significant reduction in travel. Jay Sorensen, the president of IdeaWorks, said that some business travel is “very durable,” but that there are “a whole lot” of other trips that were once routine but may no longer be taken. “Airlines are planning for a future in which there are fewer business travelers,” he said.

Airlines Find New Ways to Leverage Loyalty Programs for a Post-Pandemic Era

February 12, 2022

Skift

“One thing that has strongly survived the pandemic is the airlines’ ability to generate cash from co-brand programs,” said Jay Sorensen, president of Milwaukee-based IdeaWorks, a travel brand consultant. “I think you’re seeing some airlines behave in a way that reflects that area of relative success.” “(The value of the programs) is based on the ability to sell miles or points to the banks that issue the credit cards.” The issue, he added, is that selling all or part of a loyalty program provides immediate cash while retaining a loyalty program provides a consistent way of generating revenue as well as a method of interacting with passengers.

US & Canada Airlines register larger ancillary revenue share with more than 37% of global total for 2021

February 10, 2022

Travel Daily News

Last year CarTrawler and IdeaWorksCompany reported the ancillary revenue disclosed by 75 airlines for 2020. These statistics were applied to a larger list of 109 airlines to provide a global projection of ancillary revenue activity by the world’s airlines for 2021. The image below shows how this revenue is distributed within five regions of the world. “The continued growth of ancillary revenue per passenger through 2021 shows the growing importance of this revenue stream to airlines across all markets. The difficult year of 2020 will, in CarTrawler’s view, prove to be a turning point for the way ancillary revenue is perceived by all of us across the travel industry. It is an area with significant growth potential, fueled by differing consumer behavior as we emerge into a post-pandemic world. Travelers’ behaviors have evolved, and as long as ancillary services are providing the reassurances and services that consumers are seeking there is no reason why the expansion of this revenue stream can’t continue,” commented Aileen McCormack, Chief Commercial Officer at CarTrawler.

Premium Economy Might Be a Downgrade for Investors

January 7, 2022

Wall Street Journal

Businesses periodically try to rein in travel expenses. But as Jay Sorensen, president of consulting firm IdeaWorksCompany, points out, this often gets resolved with loopholes. Over the past decade, many carriers phased out first-class seats, which businesses were increasingly reluctant to pay for, and instead made business class more expensive and lavish, including lie-flat seats and in some cases enclosed personal cabins. Premium economy then took the place of the old business class and bridged the price gap.

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