Ancillary Fees Becoming More of a Driver For Airlines

Image: Airport tarmac with airplanes and service vehicles at sunset. (Photo Credit: Adobe Stock/william87)
Image: Airport tarmac with airplanes and service vehicles at sunset. (Photo Credit: Adobe Stock/william87)
Rich Thomaselli
by Rich Thomaselli
Last updated: 4:25 PM ET, Mon October 14, 2024

Ancillary fees were once a nice little add-on for airlines. Now they are becoming more and more of a revenue driver.

What used to be a small charge to bring an extra bag or to change your seat suddenly became a huge factor in why airlines made more than $900 billion in revenue last year, according to Phocuswire.

Now passengers are willing to pay more for things like extra leg room.

According to a CarTrawler report, 57 airlines combined for a $7.4 billion rise in ancillary revenue in 2023. That was more than 25 percent greater than it was in 2022 and almost 50 percent higher than in 2021.

Expect more airlines to offer more bundles in ticket packaging, including things like car reservations and hotels. Call it one-stop shopping, and away for airlines to bring more customers to their doors. 

“The dream of the airline is the marketplace - the travel marketplace,” said Eric Leopold, founder and managing director of aviation consultancy Threedot.

Since many travelers book their plain first, airlines are in a unique position to be privy to the likes and tendencies of customers.

“They know what you eat, because they serve the meal [on the plane],” he said. “So if you can pick your preference in the meal, they say, ‘oh, we noticed you like Italian food, by the way, when you arrive at your destination, here's the top five Italian restaurants when you arrive, and here's the 10 percent voucher discount if you come on our behalf.’ ”

Could a sea change be coming?

Pardon the pun, but it would be a sea change in how airlines go to market.

“The ancillary world, once you start to dig into it, is quite a complex world,” said Sinead Finn, founder of Affinnity airline consulting agency.

Said Damian Hickey, global head of travel partners at Travelport: "Global distribution systems, online travel agencies, travel management companies, online booking tools, agencies’ custom user interfaces, back office and mid-office applications, etc. all need to speak the same language for the shopping, booking and servicing to flow smoothly."

One potential problem is that legacy carriers differ from low-cost carriers. The capability to offer more services might not technologically be there for everyone.

There’s no doubt, however, that airlines have long been looking for other ways to drive growth.


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Rich Thomaselli

Rich Thomaselli

Associate Writer

Editor Associate Writer true 9281 14744 Rich Thomaselli has written for TravelPulse since 2014 and has been a professional journalist for nearly 40 years. His work has appeared in USA Today, the New York Times and New York Yankees publications. He is an 11-time writ

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