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Loyalty Tops Airline Ancillary Revenue: 2023 CarTrawler Yearbook

In the ever-evolving airline industry, ancillary revenue continues to be a focal point of interest, acting as a catalyst for economic stability and growth. In 2022, 61 airlines recorded a commendable 51% increase in ancillary revenue, as reported in the 2023 edition of the CarTrawler Yearbook of Ancillary Revenue by IdeaWorksCompany.

American Airlines announces upgrades to its Citi/AAdvantage Executive World Elite Mastercard
American Airlines announces upgrades to its Citi/AAdvantage Executive World Elite Mastercard. American is top of the list for ancillary revenue generated by its AAdvantage program in 2022 at $5.8b.

Mixed Results Amid a Global Recovery

Despite the impressive growth for these airlines, the industry painted a mixed picture. Some airlines experienced a dip in ancillary revenue in contrast to the broad upward trajectory. Ancillary revenue as a percentage of total airline revenue and per passenger slightly receded. In part, that was influenced by a 50% global airline revenue surge in 2022 and heightened consumer demand escalating air fares.

Unearthing the Data

A comprehensive alphabetical listing of 65 airlines, from Aegean to Wizz Air, is revealed in the Yearbook. It offers a deep dive into total ancillary revenue in US dollars and ancillary revenue as a percentage of total airline revenue, providing invaluable insights for industry stakeholders.

Delta, United, and American led the pack in the top 10 airlines for ancillary revenue. Meanwhile, loyalty programs emerged as pivotal, with American – AAdvantage, Delta – SkyMiles, and Southwest – Rapid Rewards topping the chart.

Frequent flyer program ancillary revenue IdeaWorksCompany & CarTrawler

The Loyalty Paradigm

Peter O’Donovan, CEO of CarTrawler, spotlighted loyalty as a key trend propelling ancillary revenue streams. The metamorphosis of low-cost carriers and top US airlines converging on loyalty programs heralds a new era, reaping substantial returns and bolstering ancillary revenue.

“For me, the key trend to watch into 2024 is loyalty,” O’Donovan said. “While low-cost carriers have always had the edge on driving ancillary revenue streams, many of the top US airlines are catching up. They are seeing real returns from their loyalty programs and frequent flyer benefits.”

“I expect airlines in Europe and the rest of the world are taking note of this development and evidence of the real returns it’s bringing in terms of yield,” O’Donovan continued. “Within our own operations in CarTrawler, we’re seeing greater demand for the inclusion of car rental services in loyalty programs. In this way, airlines and hotel groups can reach a wider customer base with the most relevant rewards. We currently power car rental loyalty for 18 partners. They include Alaska Airlines, eDreams, Emirates, Eurowings, Swiss, United Airlines and WestJet. Next year, we expect this area of our business to expand significantly. We continue to invest and deliver on our company strategy, by enhancing our proposition through innovation.”

Unique Insights

The Yearbook unveils global insights on ancillary trends, from AirAsia’s Super App attaining 34.4 million average monthly users in 2022 to Frontier’s revenue from assigned seating fees hitting $251 million. These figures reflect the many, varied opportunities for airline ancillary revenue generation.

Beyond the Horizon

As airlines navigate the post-Covid travel landscape, diversifying and fortifying revenue streams transcends traditional ticket sales, with their miserly margins. The focus continues to be building revenue through ancillary sales, propelled by innovation and tailored customer value propositions.

About CarTrawler and IdeaWorksCompany

CarTrawler stands at the pinnacle as a global B2B provider of car rental and mobility solutions, driving partnerships and ancillary revenue opportunities for the travel and airline industry. IdeaWorksCompany is known for industry-leading research and consulting, specialized in boosting airline profits through ancillary revenue innovations and a la carte pricing.

FlightChic Take

The 2023 CarTrawler Yearbook of Ancillary Revenue is a sharp lens through which reveals the future of airline economic sustainability. As airline ancillary revenue adapts to the dynamic industry landscape, airlines can harness its potential. Ancillary revenue is an indispensable element of profitability and a contributor to customer satisfaction.

For a comprehensive read, download the full IdeaWorks and CarTrawler report here.

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