Airline Fees: The Naked Truth
Airline fees remain a “pain point” for many travelers, and the pain is getting worse. Despite all the focus, however, you still see some public confusion. The latest exhaustive report (104 pages!) from IdeaWorks presents a good starting point for a dispassionate assessment of the realities and myths of airline fees.
Bonus income for airlines
The Irish Times
Ancillary revenue is becoming more and more lucrative for airlines, with $40.5 billion collected by 67 airlines last year, from baggage fees, food, shopping, hotels, car rental, and frequent flyer incentives.
US airlines lead in driving ancillary revenue
Travel Weekly UK
A total of $40.5 billion was made in ancillary revenue, comprising 8.7% of total sales, by 67 airlines covered in a new survey. Revenue from ancillaries delivered $6.2 billion for United Airlines, represented 36.4% of sales for Wizz Air, and $51.80 per passenger carried by Spirit Airlines in the US. The study covers airlines that disclosed revenue in 2015 financial filings from activities such as frequent flier miles sold to partners, fees for checked bags, and commissions from car rentals.
Domestic Airlines add tailwind to ancillary business
The Business Standard – India
According to a survey by US-based consultancy firm IdeaWorks Company, airlines globally earned $26 billion in ancillary revenue in 2015 with US carriers United, American and Delta topping the list. According to the survey, US-based low-cost airline Spirit earned about 43.4 percent of all its revenue from ancillary sources, followed by Allegiant Air and Wizz Air, which earned 37.6 percent and 36.4 percent, respectively, of their revenue from ancillary sources
Airfare price revolution
The West Australian
In its first annual report on the subject, Ideaworks in 2008 estimated airlines around the world were charging an estimated $US13.5 billion a year in ancillary extras. By 2015, that figure had soared to $US59.2 billion, a rise of nearly 450 per cent, with the figure still increasing by around 20 per cent a year. But now, with the oil price below $US50 a barrel, there’s no going back to the old system of inclusive fares. Airlines have sold a la carte pricing to their customers as increasing choice and, in America, customers have responded by awarding airlines with the highest ancillary revenue rates the highest profitability and growth.
Ancillary revenues on the up
Jay Sorensen charts the growth in ancillary revenue rates for airlines and what it means for the future. “My organisation, Ideaworks published the first ancillary revenue review of top-performing airlines back in 2008. The top ten airlines generated $8.4 billion that year. Fast forward to 2015 and the top ten tally has leapt to nearly $26 billion. This group is now a billion-dollar club with annual ancillary revenue from $1billion to $6.2 billion − which was top carrier United’s total
Airfares Are at a 7-Year Low, but Are You Getting a Deal?
US News & World Report
As Jay Sorensen, president of travel industry firm IdeaWorks, puts it: “I think consumers are getting a very good deal. And so are airlines.” When you look at the price of airfare over time, it’s a good value to the consumer. Unlike the years of economic strife for airlines in the wake of the terrorist attacks of Sept. 11, 2011, the industry’s profits continue to climb, enabling investment in improved products and aircrafts.
Ryanair’s ancillary revenue hits record level
Ryanair generated the sixth highest revenues globally from non-flight ticket items in 2015, according to a new report, which shows the top 10 world airlines pulled in almost $26bn (€23.6bn) in ancillary revenues during the year. In a newly published list of the top 10 ancillary revenue generating airlines from aviation research group IdeaWorks, the Dublin-based carrier ranks ahead of the likes of Lufthansa, Qantas, and EasyJet and is only dwarfed by US giants United Airlines, American Airlines, and Delta.
Analysis: Is the golden era of frequent-flyer benefits over?
Buying Business Travel
Social media comment from travellers who opt for the lowest fares and get the least rewards has, predictably, been highly critical; those with elite status who pay higher fares and get the best rewards, less so. But as the global airlines have shown with their egregious pursuit of ancillary fees, they’re very much focused on increasing revenues. Total ancillary fees levied by the world’s airlines last year reached a record US$59.2 billion according to the consultancy IdeaWorks, with US airlines alone accounting for a third of this revenue stream.
American and United Ready No-Frills Fares to Take on Discounters
Stung by competition from ultra-discount carriers, American Airlines Group Inc. and United Continental Holdings Inc. are striking back with cheap, no-frills tickets of their own. The strategy carries risks for the legacy airlines. American, United and Delta dominate the U.S. and have alliances with global carriers, advantages that would seem to negate the need to compete for the most price-conscious customer, said Jay Sorensen, a former Midwest Airlines executive who is now president of airline consultant IdeaWorksCompany.