Airline ancillary revenue forecast to hit almost $70 billion this year

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Ever wondered why airlines are so desperate to work out how to get passengers to buy more stuff? It’s estimated to be a $67.4 billion bounty this year.

The latest ancillary revenue report from IdeaWorks and CarTrawler is forecasting an $8 billion increase in airline ancillary revenues from the 2015 figure.

The ancillary revenue pie is now expected to be a 9.1% share of overall airline revenue globally.

The largest year-on-year increase came in 2015 when the industry hit $59.2 billion worldwide, up from $49.9 billion the year before.

The majority of the ancillary revenue pie comes by way of services such as onboard products, checked baggage, seat selection and early boarding – all of which accounted for $44.9 billion of the total.

The remainder is from what IdeaWorks calls “non-fee activity”, such as the sale of frequent flyer services to partners and commission gained from the sale of hotel rooms and car rental on airline websites.

Aileen O’Mahony, chief commercial officer at CarTrawler, argues that making a success of ancillary revenue generation is “dependent on offering customers the right product at the right time, often before they have even asked for it”.Amazon has proven to great effect the positive impact that data science has had on its business with an estimated

She points to how Amazon has embraced data science in the way that it has created recommendation engines to showcase products at different points in the purchase cycle.

“As with Amazon, the unlocking of data-driven insights is enabling airlines to propose ancillary products and services to their customers in an increasingly sophisticated way.

“This application of data is fueling the continued growth of the sector while at the same time unearthing further potential for building loyalty by identifying when, how, where and what to offer customers when they visit your website or app.”

NB: Download the full report here.

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