By The Numbers: Airlines Get Charged Up
As seats get narrower, airlines are getting fatter off bag fees, meals and other extras. Airlines globally were projected to pull in a record $82 billion in ancillary revenue last year, up nearly fourfold from 2010. Passengers grumble, but such additional revenue is a boost to carrier profitability–and in turn gets invested in new planes, in-flight entertainment and airport waiting areas.
Airline Baggage Fees Go International
Over the past decade, ancillary revenue at the 10 airlines that collect the most in fees jumped from $2.1 billion to more than $28 billion by 2016, according to IdeaWorks Co. The top three U.S. carriers accounted for $16.3 billion of that amount. Bag fees “have proven to be big revenue generators, and they too will become status quo in the trans-Atlantic by end of 2019, and globally thereafter,” Jay Sorensen, president of IdeaWorks . . .
What Does Your Airfare Actually Buy?
New York Times
Revenue from fees and other payments is “growing every year because it works,” said Jay Sorensen, the president of IdeaWorksCompany, a consulting firm that focuses on the airline industry. According to a report his company released this fall, the airlines made more than $82 billion in ancillary revenue — fees from passengers and other payments from partners like credit card companies and hotels — in 2017. That is about $46 billion more than five years ago. The report, sponsored by CarTrawler, a company that provides car rental recommendations on many airlines’ websites, used data released by 66 airlines last year to extrapolate the likely ancillary revenue of 184 carriers worldwide.
Air Canada’s ‘ancillary’ fees for customers add up to big bucks
CBC News – Canada
Global airlines are expected to earn a record $82 billion US this year by charging customers extra for everything from seat assignment to baggage fees to travel commissions. And Air Canada is among the top ten airlines in the world when it comes to earning this so-called ancillary revenue, racking up nearly $1.18 billion US last year, according to reports from IdeaWorksCompany, a U.S. research company that tracks airline revenue.
Report projects 264 per cent rise in airline fee income since 2010
The CarTrawler Worldwide Estimate of Ancillary Revenue report from IdeaWorks Company, a consultancy on airline ancillary revenues, and CarTrawler, a provider of online car rental distribution systems, included income earned from a broad range of sources such as hotel booking commissions, the sale of frequent flyer miles to partners, and the provision of a la carte services like checked baggage, premium seating, and priority boarding.
Wyndham Rewards tops list for loyalty program reimbursement
The third annual “CarTrawler Hotel Reward Payback Survey” was conducted by
IdeaWorksCompany and analyzes what guests earn back from hotel bookings. The study sifted through 1,350 reward queries from six reward programs: Best Western Rewards, Hilton Honors, IHG Rewards Club, Marriott Rewards, Starwood SPG and Wyndham Rewards. As part of the process, the lowest reward price in points was recorded alongside the corresponding room price in U.S. dollars.
The Best and Worst Hotels for Cashing in Rewards Points for 2017
Wall Street Journal
A new study shows significant declines in buying power at some major hotel programs, with the number of points needed to book rooms rising even as the dollar cost of a room drops. The study calculates the payback you get from staying at major hotel chains by comparing the price you pay in cash for rooms and how many points it takes to book the same room. IdeaWorks, a consulting firm, conducted 1,350 reward queries at six big hotel companies (none of them clients). Travel technology company CarTrawler sponsored the study.
Airlines look to take flight with lucrative extras
Over the past decade, so-called ancillary fees have experienced huge growth. The top 10 airlines, ranked by total ancillary revenue, generated $2.1bn in 2007. In 2016, this had grown to more than $28bn, according to research by IdeaWorksCompany and CarTrawler. Among the most successful groups at selling ancillary services are United, which generated $6.2bn in revenue last year, Delta, which generated $5.17bn, and American, which generated $4.9bn. Globally airlines are estimated to have earned $67.4bn of income from ancillaries last year, representing about 9.1 per cent of airline revenue for 2016, up from 4.8 per cent in 2010.
Frequent flier programs generate profits for airlines and frustration for travelers
Los Angeles Times
Jay Sorensen, president of IdeaWorks Co., a consultant on boosting airline revenue, called frequent flier programs a “tremendous cash cow” for the airlines. In a recent report, Sorensen estimated that the nation’s top four airlines — American, United, Delta and Southwest — generated a combined $9.5 billion in revenue last year from frequent flier programs. “The programs have a huge impact on the bottom line for airlines,” he said. “They simply can’t do without them.”
How Much Are Frequent Flier Miles Really Worth?
New York Times
Merriam-Webster defines a mile as a unit of measurement equal to 5,280 feet. But in the increasingly byzantine world of frequent flier mileage reward programs, the term has little or no connection to physical distance. In 2015, United and Delta joined Southwest, Jet Blue and other airlines that award miles based upon ticket price and class, rather than distance traveled. American Airlines followed suit in August 2016.