Buying ‘extras’ when flying? You’re making airlines billions

Close up photo of woman holding passport and boarding pass at the airport

Airlines are making an enormous profit from all the ‘extras’, leaping more than 10 times in the last 10 years.

According to a report from NZ Herald, a study of 10 airlines that make the most money from ancillary products shows the revenue number sits at around $40 billion.

That’s a big number, especially when compared to previous figures – US$2.1 billion in 2007, and over US$28 billion last year.

Per NZ Herald, the study from IdeaWorksCompany shows that despite airfares being darn close to historic lows, passengers wanting meals inflight, checked baggage, and frequent flier schemes are getting stung with bigger price tags.

Airlines in the top 10 biggest ancillary earners included United Airlines, which actually makes the most with US$6.2 billion earned from ‘extras’ last year alone, AirAsia, Ryanair, easyJet and Qantas.

Following on from United Airlines, other US carriers took the next top three spots, with most profits coming from frequent flier programs and co-branded credit cards linked to the programs.

United: $6.22 billion
Delta: $5.17 billion
American: $4.9 billion
Southwest: $2.83 billion
Air France/KLM: $2.10 billion

Per NZ Herald, Ryanair and easyJet made the entirety of their ancillary revenue from a la carte services such as bags or food, clocking up nearly US$2 billion and US$1.3 billion, respectively.

And when looking at ancillary revenue per passenger, around the world the top earners included Spirit in America at US$49.9; Jet2.com in Europe and Russia at $42.46; AirAsia X in the APAC region with $34.41.

Spirit: $49.89
Allegiant: $48.93
Frontier: $48.60
United: $43.46
Jet2.com: $42.46
Qantas: $42.38
Virgin Atlantic: $42.25
AirAsia X: $34.41
Korean Air: $32.59
Alaska Air: $31.41

Our own national carrier, Qantas, saw 90 per cent of its ancillary dollars coming from its points scheme, per NZ Herald, with US$1.2 billion all together.

“Low cost carriers rely upon a la carte activity by aggressively seeking revenue from checked bags, assigned seats, and extra leg room seating,” the report claimed, per the Herald.

“Some of the best in this category have extensive holiday package business with route structures built upon leisure destinations.”

Meanwhile, Air New Zealand, and carriers from the Middle East and Africa did not rank in the top 10 ancillary revenue lists.

Per NZ Herald, the President of IdeaWorksCompany, Jay Sorensen, said there are two main reasons that airlines would refrain from sharing their ancillary revenue figures publicly.

“One would be a competitive fear, that other airlines would take note,” he said, per Herald.

“The second is a public relations fear, that reporters would pen articles that lampoon airlines which are successful at this.”

Apparently, Britain’s easyJet airline stopped revealing its numbers for the latter reason, per Sorensen.

“Of course, airlines that report results are happy to show investors the results of their effective management.”

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

Latest comments

Maxwell Smart says:
July 20, 2017 at 1:42 pm
& how many airlines will fail this year. Airlines are a horrible investment, especially right now.
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