Margins have airlines selling more ancillaries through agents
Jay Sorensen, president of IdeaWorks, which tracks airline ancillary sales worldwide, said that airlines and GDSs are finally filling the “black hole of ancillaries.” IdeaWorks reported that ancillary revenue, which it defines as including not just a la carte options and bundled fare families but hotel and car rental bookings and income from co-branded credit cards, increased 19.6%, to $27.1 billion, in 2012.
Airlines collect $27 billion beyond ticket revenue
The airlines collected $27.1 billion in baggage fees; head-of-the-line boarding rights; hotel and car rental commissions; and other ancillary revenue programs in 2012, according to the IdeaWorksCompany’s CarTrawler Review of Ancillary Revenue Results for 2012, released Wednesday.
Welcome aboard, can I buy you a drink?
In fact, ancillary revenue is now so big, it has created an industry, led by marketing think tanks like America’s Ideaworks Company. In 2007, according to Ideaworks, airlines worldwide were just starting out on the new craze and found a comparatively puny $US2.45 billion they could charge passengers extra for.
Airlines Look for New Fees to Boost Revenues
“It was a tool used by low-cost airlines to say ‘Hey, we’re different from a global airline. We’re going to unbundle. You’ll pay for what you want and need,’ ” said Jay Sorensen, president of IdeaWorksCompany, an airline consulting firm in Wisconsin.
International Business Times
US Airlines Bag $3.5B In Luggage Fees As Revenue Model Shifts
“The ancillary revenue revolution is focusing less on product development and more on retail methods,” Jay Sorensen of IdeaWorksCompany explained in a recent study on ancillary revenue. “The big categories, such as checked bags, comfort- and convenience-adding features, and the sale of loyalty miles or points, are slowly being checked off the list by revenue-savvy carriers.
Southwest v. Frontier v. Fees
“Unfortunately for Frontier, they have achieved in crafting the most complex offer out there,” Jay Sorensen, president of IdeaWorksCompany, a global, Wisconsin-based consulting firm on ancillary revenue, brand development and frequent flyer programs, told me. “When I read through this, I thought, ‘This is just too complicated.’
Crains Chicago Business
United Airlines in top 10 in redeeming miles, survey shows
United Airlines ranked in the top 10 among all carriers allowing passengers to use frequent-flier miles to book flights, according to the Switchfly Reward Seat Availability Survey by IdeaWorksCompany.
Cashing in Frequent Flier Rewards Easiest on Value Airlines
If you’re looking for the airline where you’ll have the best chance of cashing in frequent flier miles or points for a seat on a future flight, you’re best odds are with value airlines. In fact, the fourth annual Switchfly Reward Seat Availability Survey found Southwest, its subsidiary Airtran and JetBlue among the top five airlines for customers trying to book tickets with frequent flier miles or points.
The Wall Street Journal
Frequent-Flier Miles: Best Airlines for Cashing In
Booking a free ticket with your frequent-flier miles can seem like casino gambling: Getting what you want is like hitting a jackpot, but more often than not, the house wins.
Low Cost & Regional
Levelling the Field
Jay Sorensen, president of IdeaWorksCompany, believes that the changes made by Southwest will not alienate its customers, claiming: “[It] certainly has built a huge portion of its marketing message on the ‘no fees’ promise. But I think a change would create far more internal angst than it would for consumers. This company’s ethical emphasis and promise to consumers is a core employee belief. With bankruptcies, mergers, impending government shutdowns and recession, the American consumer seems prepared for anything.”