A fee here, a fee there – and yet there again. It tallies to a mighty total for the world’s airlines, which raked in more than $27 billion in so-called ancillary (non-ticket) revenue in 2012, according to a new report from the IdeaWorksCompany consulting firm. That’s nearly 20 percent higher than the year before and more than 10 times the number in 2007.
For some airlines, revenue from charges for checked baggage, priority check-in and seating, Wi-Fi access, onboard food, sales of frequent-flier miles to corporate partners and other sources mark the difference between profit and loss, said IdeaWorks president Jay Sorensen.
U.S. carrier Spirit Airlines, known for its cheap fares, tops the charts in Sorensen’s survey for its dependence on ancillary fees, listed as 38.5 percent of its total revenue. With numbers like that,” you can imagine it's vital and life sustaining from a corporate perspective,“ Sorensen said in an interview this week. He views such money as “desperately needed by airlines during troubled economic times.”
The airline that earned the most total ancillary revenue among the 53 carriers in the 2012 survey was United Airlines, at more than $5 billion. Delta Air Lines, listed as No. 2, earned less than half that amount, it found.
While many charges feed the ancillary revenue stream, the so-called a la carte fees that passengers pay easily make up more than half the world total, Sorensen said. The most aggressive airlines generate more than 20 percent of their revenue from a la carte fees, and some make more than $30 per passenger from ancillary revenue, the report found.
So where so we go from here? Up, it would seem. “Every year key numbers are getting larger,” the report states.
No doubt the true totals are higher since Sorensen was able to locate detailed ancillary revenue data on fewer than half of the 116 world airlines he surveyed for the “2013 CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany.”