IdeaWorksCompany, the leading global consultant on airline ancillary revenue, has released a new report, A Field Guide to the Best of Airline a la Carte, written by veteran airline industry consultant Jay Sorensen. Drawing on global data and industry examples, the report examines the strategies airlines use to successfully merchandise ancillary services while maintaining customer satisfaction. It highlights how baggage fees remain the largest source of ancillary revenue, while seat assignment fees have rapidly grown to rival baggage as a major contributor for many airlines. Among the report’s observations:
- Top performing airlines can earn baggage revenue of $20 per passenger when they charge for overhead carry-on bags.
- Baggage, seats, and branded fares generate 95%+ of ancillary revenue for airlines lacking a major co-branded card program.
- Likely 25% of American Airlines’ passengers have bag payments waived through a co-branded credit card or elite loyalty status.
- United collected $1.3 billion from seat fees in 2023, which was more than the $1.2 billion it received for checked bags the same year.
- EasyJet’s onboard retail per passenger revenue for FY2024 was £2.38 ($3.01) and profit was £0.68, for a very healthy 28.6% profit margin.