How airlines squeeze more money out of us
New Zealand Listener
Charging for extras on top of an airfare was initially driven by low-cost carriers, but ancillary revenue is now an important earner for all airlines. US consultancy IdeaWorks Company forecasts it will increase 19% worldwide to US$59.2 billion in 2015, up 163% on five years ago.
Budget Fliers Should Love Airline Fees
Wall Street Journal
In 2014 airlines generated $38 billion in ancillary revenue, according to a study by IdeaWorks. That money keeps base fares low. And airline profits are far from outrageous. The average net margin for all scheduled U.S. carriers was 4.4% in 2014. Even in the first three quarters of 2015, after oil prices had plummeted, the average net margin was only 14%.
Aer Lingus, Pegasus, Spirit, SWISS and WestJet provide excellent online examples of a la carte promotion
Travel Daily News
The latest report from IdeaWorksCompany, sponsored by CarTrawler, reviewed the websites of airlines all over the world and details good practices regarding booking paths – and also what airlines should avoid.
Delta Is Out-Innovating All Other Airlines With Its Branded Fares
Airline marketing and ancillary revenue consultancy Ideaworks has announced its list of the top five airline marketing innovators for 2015, and listed Delta as the industry’s best at building revenue through ancillary sales, including its “branded fares” and Comfort+ product. “Delta continues to be an industry leader in product development and providing premium choices for its customers at every price point from Basic Economy to First Class,” Ideaworks states in its announcement.
Airlines Made Close to $11 Billion Off of Fees This Year
Hold on to your wallet. North America’s airlines will charge almost $11 billion in so-called a la carte fees for everything from seat reservations to luggage this year — a 24% increase over what was collected in 2014. That’s according to a new survey by IdeaWorksCompany, an ancillary fee consulting company. The results suggest that despite an outcry from airline passengers the sky remains the limit for new fees.
American AAdvantage frequent flier changes reward buying over flying
“It’s dangerous to say any passenger doesn’t matter,” said Jay Sorensen, president of IdeaWorksCompany, an airline consulting firm headquartered in Wisconsin. “I’m just not certain the programs necessarily know who they’re built for anymore because, just as cash has corrupted Washington, it perhaps has corrupted the purity of frequent flier programs’ original intent.”
Choice Profits: Airlines and Passengers Benefit from Personalization
APEX Airline Passenger Experience Magazine
Jay Sorensen, president, Product, Partnership and Marketing Practice at IdeaWorksCompany explains how the retail strategy, originated from low-cost carriers, gives passengers greater control over their experience. “The airline industry is moving from a one-price-fits-all methodology to one that can be best compared to shopping in a grocery store,” he says. À-la-carte options let consumers design a made-to-order ticket.
Hotel Rewards Programs: The Best and the Rest
Wall Street Journal
But Marriott is better than most, and other chains offer good deals if you know how to play the game. The study found 54% higher loyalty-program payback on average from a stay at a Marriott hotel than from a stay at a Starwood property such as Sheraton. “Hotels value their currency—points—in a certain way, and Marriott has chosen to value its currency higher than the competition,” says Jay Sorensen, president of consulting firm IdeaWorks Co., which conducted the study.
This Hotel Company Is Best at Rewarding Loyal Customers
If you’re a loyal Marriott customer, pat yourself on the back. According to a new study from the consulting firm IdeaWorks, Marriott’s rewards program gives loyalty members the most generous payback for future room stays of any hotel company. The average return for money spent on Marriott is 9.4%, meaning that for every $100 spent with Marriott, a loyalty member can expect $9.40 worth of value toward a future stay.
European Legacy Airlines May Experience Ancillary Pains
Wall Street Journal
Lufthansa will become the first European legacy airline to unbundle services by introducing a three-tier fare system starting from October. This allows the company to compete more directly on the actual fare but also to charge more for non-ticket items like checked bags and seat booking. Such services incur minimal costs and therefore can add a very profitable revenue stream for airlines. So-called ancillary revenues jumped 21% in 2014 globally from a year earlier, according to industry consultant IdeaWorksCompany and online booking engine CarTrawler.