Wednesday, 3 August 2011

Annoying extras earn airlines billions

How much money do airlines make out of those irritating extra charges for anything from checked bags to advance seat selection? New research shows that last year 47 of them earned a collective €15.11 billions – an increase of 38% over 2009 and almost double the total in 2008. It may not surprise you that These extras are known in the industry as ancillary revenue. When this is calculated as of as a percentage of total revenues airline flying from the UK figure prominently. Irish carrier Ryanair was third biggest earner among the airlines surveyed, making 22.6% of its income from ancillaries. Jet2.com was fourth with 22.1%, easyJet sixth with 19.2% and Flybe ninth with 15.7%. US airline Southwest, the grandfather of low cost carriers, was way down the list at 4.3%. But when it comes to extras per passenger Jet2.com beat its UK based rivals out of sight, earning €24.20 for every e more obvious cash cows such as sales of in flight food and drink. ticket it sold. Flybe and easyjet made €14.84 and €13.42 respectively. Surprisingly Ryanair earned only €10.90 per customer. One important footnote: the report, conducted by Wisconsin-based IdeaWorks and published by the computer reservations giant Amadeus, notes that they can include advertising sales, commission on hotel or care rental bookings, the sale of frequent flyer points to partner companies and other non fare income as well as the more obvious cash cows such as sales of in flight food and drink.

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