DUBLIN, IRELAND & SHOREWOOD, WISCONSIN – CarTrawler, a leading provider of online car rental distribution systems, and IdeaWorksCompany, a foremost consultant on ancillary revenue, project that airline ancillary revenue will reach $148.4 billion worldwide in 2024. This represents a significant increase from $117.9 billion in 2023 and surpasses the pre-pandemic record of $109.5 billion set in 2019.
Ancillary revenue encompasses activities and services that generate income for airlines beyond the basic transportation of passengers. This includes commissions from hotel bookings, the sale of frequent flyer miles to partners, and a la carte services, providing consumers with more options and airlines with additional revenue streams.
The resilience of ancillary revenue is evident even during challenging periods for the airline industry. In 2012, ancillary revenue per passenger was estimated at $12.13; by 2019, it had increased to $23.91, and the 2024 projection is $29.85.
Consumer behavior regarding a la carte services has evolved, especially during the pandemic. Factors such as increased checked baggage due to longer stays, a higher proportion of leisure travelers who tend to check more bags, and a preference for seat assignments that offer more personal space have all contributed to the growth in ancillary revenue.
Several airlines have reported significant increases in ancillary revenue per passenger compared to pre-pandemic levels. For instance, Spirit Airlines' ancillary revenue accounted for 56.4% of its total revenue in 2023, up from 51.5% in 2022.
Traditional airlines represent the largest category of passenger traffic and revenue, with approximately 63% of ancillary revenue generated by a la carte activities. The remaining 37% comes from frequent flyer programs and commissions from travel-related services such as car rentals, hotel bookings, and travel insurance.
The enduring appeal of travel ensures that passengers will return, seeking experiences that are central to human identity. The market will reward airlines that are aggressive, creative, and transparent in their approach to consumers. While the future of the airline industry may evolve, the pivotal role of ancillary revenue remains firmly established.
