Fees or Famine?

Fees or Famine?

The airlines are flying high once again. Out of the turbulent skies of 2009, clouded by a travel industry recession, tarmac delays and the passenger bill of rights, a better and more profitable industry has emerged. Not even volcanic ash could ground this resurgence. What could have caused the turnaround? It is the extra fees, of course.

Ancillary services, as they are properly called, and the resulting unbundling and re-bundling of new ‘fare families,’ have proved a highly successful revenue driver for air carriers that have been suffering from years of losses. In 2009, U.S. airlines earned nearly US$8 billion1 in revenue from ancillary services.  PhoCusWright’s Airline Ancillary Services: Redefining Travel Distribution (or Not),, revenues will soar even higher in 2010. Fees for everything from meals and baggage (checked or carry on), to extra leg room or travel by an unaccompanied minor have kept the registers ringing.

The fees are here to stay. Airlines will keep adding new products and services in-flight, pre-flight and post-flight, from on-demand movies to wireless connectivity, including tie-ins with partners such as hotels, car rental companies and ground transportation. ATPCO, a leader in air distribution, now lists more than 100 industry sub codes for a la carte services. Everything but the plane will be for sale, and not just at the time of purchase but up to and during the flight. As a result, air travel content is no longer just a simple ticket.

This is a landmark change in the way consumers search, shop and buy air travel. It will require vast changes in the technologies and procedures of air distribution and it will spur new business models and innovations. Ancillary services are taking off, do not miss the flight.

Order  PhoCusWright’s Airline Ancillary Services: Redefining Travel Distribution (or Not) (US$599) to learn more (publication date is May 28).

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1 Source: Department of Transportation