CarTrawler, the leading provider of online car rental distribution systems, and IdeaWorksCompany, the foremost consultant on ancillary revenue, project airline ancillary revenue will increase to $65.8 billion worldwide in 2021, compared to $58.1 billion in 2020.
The CarTrawler Worldwide Estimate of Ancillary Revenue represents an increase built upon 2021 passenger traffic gains, with consumer support for a la carte services and co-branded credit cards holding steady.
Subscribe to our weekly newsletter and stay up to date
Reporting the ancillary revenue disclosed by 75 airlines for 2020. These statistics were applied to a larger list of 109 airlines to provide a truly global projection of ancillary revenue activity by the world’s airlines for 2021.
Ancillary revenue is generated by activities and services that yield cashflow for airlines beyond the simple transportation of customers from A to B. This wide range of activities includes commissions gained from hotel bookings, the sale of frequent flyer miles to partners, and a la carte services − providing more options for consumers and more revenue for airlines.
“As the travel industry continues its recovery, ancillary services have become an increasingly important revenue stream for airlines, and we project this grew by more than $7 billion in 2021 compared to 2020,” said Aileen McCormack, Chief
Commercial Officer at CarTrawler.
“Consumers are seeking more flexible, personalized services and offerings from airlines, opening up huge opportunities for the market. As we look to 2022, the airlines that come out on top will be the ones that find creative ways to use ancillary services to meet the evolving demands of travelers.”
The persistent power of ancillary revenue, even during airline industry upheaval, becomes more obvious. The average fare recorded by the International Air Transport Association (IATA) shows a declining trend with a significant drop during 2020, which continued in 2021. But ancillary revenue stands contrary to this trend with annual increases, to include the most challenging of aviation periods – the pandemic of 2020. In 2012, ancillary revenue per passenger was estimated to be $12.13; by 2019 this had increased to $23.91, and the 2021 projection is $27.60.
Consumer purchase behavior of a la carte services changed during the pandemic. Checked baggage activity increased because travelers might be relocating their lives or staying at destinations for a longer period. Because business travel declined, a greater share of passengers consisted of leisure travelers. Since leisure travelers tend to check more bags, this boosted baggage revenues. Seat assignments, which for many carriers now involves a fee, are more frequently purchased. Popular choices were up front seats, to ensure less waiting in congested aisles upon arrival, and exit-row seats to provide more personal space. Onboard entertainment and Wifi access (sometimes a paid option) allow travelers to avoid conversation with seat mates, reducing the opportunity for viral transmission. In effect, travelers bought a la carte services to create a personal cocoon of protection from Covid-19.