How budget airlines REALLY make their money: Jet2 and Wizz Air rely on optional extras MORE than Ryanair, with only 65% of their income coming from ticket price
The world’s top airlines collected more than £31.5billion in extra charges in 2013, an increase of more than £4billion on the previous year. Some airlines are making up to 40 per cent of their money from charging for extras like seat allocation, checking in luggage and food and drink on flights, according to a report by consultancy IdeaWorksCompany.
Wizz Air and Jet2.com worse than Ryanair for extras
Airlines around the world collected at least £31.5 billion in extra charges last year, a new study has shown, an increase of more than £4 billion on last year’s figure, and up 1,200 per cent since 2007. The report, by the consultancy IdeaWorksCompany, examined “ancillary” revenue – baggage charges, car hire commission, sales of in-flight food and drink and so forth – at 59 major airlines.
Sydney Morning Herald
What’s keeping the airline industry alive
The flying business has a cute name for it: “a la carte”. That’s how the airline industry now dresses up all the extras airline passengers are hit with in its latest marketing fad. But don’t be mistaken that the so-called ancillary revenue fad, which has been around only since the middle of the last decade, is temporary. The crude mathematics in last week’s definitive annual report on the subject, by a US consulting firm, IdeaWorksCompany, show how desperately dependant the airline industry has become on ancillary revenue.
Airlines raked in $31.5 billion in fees in 2013
The latest study on passenger fees collected by the world’s airlines reached a predictable conclusion: Airlines are pocketing more than ever. The annual tally by IdeaWorksCompany, a Wisconsin-based consultant to the airline industry, found that 59 airlines collected $31.5 billion in fees in 2013, compared with $27.1 billion for 53 airlines in 2012.
Airline fees surge to $31.5 billion
Air carriers took in $31.5 billion US in revenue from fees last year, according to a survey conducted by IdeaWorksCompany, a firm that helps airlines grow non-traditional revenue streams, and CarTrawler, a car rental services company.
Rankings for Frequent Flier Programs: How Airlines Fared
“The programs at the top are younger programs,” says Jay Sorensen, president of loyalty consulting firm IdeaWorksCompany, which sponsors an annual survey on award availability. “They don’t have these big huge overhanging liabilities of miles or points that have been accrued through credit-card activity. There isn’t this huge pile of points they’re trying to get off the books, where you have too many miles chasing too few reward seats.”
United Plans to Award Miles Based on Fare, Not Distance
United announced Tuesday that starting March 1, 2015, it will revamp its MileagePlus program to award fliers based on total ticket price, rather than miles flown. Regular travelers will earn five times their fare; elites will earn seven to 11 times the fare, depending on their tier. . . Given that United hasn’t announced any changes on its redemption side, where a round-trip domestic ticket costs 25,000 miles, many travelers will be that much further from redemption. “Clearly the programs are being redesigned to favor high-yield passengers,” said Jay Sorensen, president of IdeaWorksCompany, a frequent flier research firm.
Global aviation leaders jet into Doha for key summit
According to US-based aviation research company IdeaWorksCompany, the second major structural change in airline performance over the years has been the emergence of ancillary businesses. Based on data from IdeaWorksCompany, the average ancillary revenue per passenger could exceed $13 this year from zero in 2007.
Frequent flier smiles: It’s easier to redeem miles
The annual Switchfly Reward Seat Availability Survey, which gauges the frequent flier programs at 25 of the world’s largest airlines, found seats were available for frequent flier redemption on 72.4 percent of the flights checked. That’s a very slight increase compared with the prior year. “I was surprised by this year’s results,” said Jay Sorensen, president of IdeaWorksCompany consulting firm, which surveyed 7,640 flights in March. “Typically, when you see the industry recovering from financial duress, one of the things they cut back on is giving away free seats.”
What’s next for airline fees? More ways to pay
Although the latest numbers may show a slight decline in how much passengers are paying airlines to check their bags, the long- term trend is clearly heading in the other direction. “They’re going to go up,” predicted Jay Sorensen, the president of IdeaWorks, a research firm that advises the industry. “The airlines are always testing higher rates to see if it will fly.”