Ancillary revenue has become a major part of airline industry
revenue, but few realize just how important it is to airlines. In a
previous article, Fools learned about
how ancillary, or add-on, revenue is defined and which airlines are the
biggest revenue generators. Unsurprisingly, the budget/discount
airlines rely on ancillary revenue the most, but traditional airlines
such as United Airlines (NYSE: UAL )
are increasingly relying on it, too. Let's take a look at some
industrywide figures that help explain the importance of this revenue to
airline profitability, and at who is doing what.
Growth of ancillary revenue
It's hard to put an exact figure on industrywide profitability from ancillary revenue, because not all airlines disclose the data and/or break out profits generated from ancillary revenue. However, it's safe to assume that activities like baggage checking, seat allocation, booking fees, and on-board entertainment are high-margin activities. With this in mind, here is a comparison of industrywide ancillary revenue, garnered from The CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany, versus estimates for airline profitability.
READ THE FULL ARTICLE LINKED HERE
Source: Motley Fool Flickr account.
Growth of ancillary revenue
It's hard to put an exact figure on industrywide profitability from ancillary revenue, because not all airlines disclose the data and/or break out profits generated from ancillary revenue. However, it's safe to assume that activities like baggage checking, seat allocation, booking fees, and on-board entertainment are high-margin activities. With this in mind, here is a comparison of industrywide ancillary revenue, garnered from The CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany, versus estimates for airline profitability.
READ THE FULL ARTICLE LINKED HERE
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