Airline Ancillary Revenue Surpasses Pre-COVID Levels, Increasing Over 50% in 2022

Airline ancillary revenue, generated from add-ons and loyalty programs, has seen a significant increase, surging over 50% in 2022 compared to the previous year and surpassing pre-COVID levels. According to the CarTrawler Yearbook of Ancillary Revenue in partnership with IdeaWorks Company, airlines collected nearly $69 billion from ancillary revenue in 2022, up from $45 billion in 2021. This increase also marked an additional $10 billion compared to 2019 levels.

Several factors were cited as possible reasons for this surge in ancillary revenue. One contributing factor may be travelers’ desire for more personal space, leading to increased purchases of ancillaries such as priority boarding and car rentals.

Low-cost carriers, including Ryanair, Southwest, and Spirit, experienced significant gains in ancillary revenue, with increases of 40% or more. EasyJet saw an impressive hike of 273%, driven by the introduction of new products and services, such as its Standard Plus leisure fare in 2021, as well as increased inflight retail conversion and profit.

Full-service carriers like Delta, United, and American Airlines led the ancillary revenue growth, with gains of 37%, 44%, and 31%, respectively. These carriers benefited from their loyalty programs and co-branded credit card programs.

The report also highlighted the substantial contribution of loyalty programs, revealing that the five largest U.S. airlines generated nearly $23 billion from their loyalty programs in 2022, with an average of $33 per passenger, up from approximately $26 per passenger in 2019.

Peter O’Donovan, CEO of CarTrawler, emphasized the importance of diversified revenue streams for airlines in the post-COVID travel era. He expects ancillary revenue as a percentage of overall revenue to continue increasing over the next few years, with a particular focus on loyalty programs as a key trend to watch in the airline industry.

This data showcases how airlines are exploring new revenue streams beyond ticket sales to strengthen their business models and adapt to changing passenger preferences.

Sources: AirGuide Business airguide.info, msn.com, CarTrawler