Ancillary charges boost struggling airlines

Ancillary charges boost struggling airlines

Ancillary revenue from excess baggage charges and priority boarding are providing struggling airlines with a much-need cash boost as they grapple the aviation downturn.

Analysis of the accounts of 92 airlines has found that ancillary revenues rose a massive 345 percent in 2008 to €7.68bn compared to an earlier study in 2006 by US research group IdeaWorks.

However low-cost carrier, Ryanair, notorious for its stealth charges, only came third in the list, with €625m in ancillary income last year – coming fourth behind American Airlines, with €1.65bn, United and Delta. Qantas was ranked fifth.

As a proportion of total revenues, Ryanair’s ancillary income ranked only second at 19.3 percent compared to US-based Allegiant Air, with 22.7 percent.

IdeaWorks said in a statement:  “Ancillary revenue and the magic elixir of baggage fees did not single-handedly save the US airline industry. But it’s easy to imagine the number of airline executives who silently murmured words of thanks for the millions of dollars it delivered to bottom lines during 2008.”

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United, for example, generates an average €4.36 from checked baggage charges per US domestic passenger, while AirAsia X, the Malaysia-based low-fare carrier, made €2.06m from the sale of pre-ordered meals on long-haul flights.