Airline websites look for ancillary revenue through hotel, cab bookings and other charges

Leading global LCCs like AirAsia, Aer Lingus, easyJet, Ryanair and Spirit Airlines earn almost 20% from sale of other items

Travel News
Travel News

In a bid to boost their abysmally low non-ticket or ancillary revenue, airlines are fast turning their websites into a one-stop shop for all travel requirements. The websites of Jet Group airlines have started offering hotel bookings for both Indian and foreign destinations they fly to or connect through partner carriers. Low cost carrier (LCC) IndiGo's site offers car rental services on as many as 6,500 cabs across India on a daily basis. 

A leading LCC has started offering priority check-in and baggage retrieval for Rs 200. All airlines offer package holiday deals that promise to take care of all travel needs of vacationers or business travelers. 

Clearly, Indian carriers - who still earn almost 90% of their total revenue from sale of passenger tickets - want to increase the share of ancillary revenue to the global level of about 20%. The big ticket ancillary revenue streams typically are - excess baggage fee, cancellation/rescheduling charges, onboard sale of items, including food, early boarding, pre-selection of seats, travelinsurance and hotel and cab bookings, insurance. 

Leading global LCCs like AirAsia, Aer Lingus, easyJet, Ryanair and Spirit Airlines earn almost 20% from sale of other items, closely followed by US airlines where unbundled services account for 12% of total revenue. Amadeus worldwide estimate of ancillary revenue projects airline ancillary revenue will reach $36.1 billion worldwide in 2012, with barely a fraction of that figure coming from India as per a TOI report.

But unlike their foreign counterparts, airlines in price-sensitive India have to be careful amount what they charge for. "There is lot of government interference in ancillary revenue stream here. Airlines started charging for pre-booking of seats, a common practice globally, but the Directorate General of Civil Aviation (DGCA) banned that. So we have to be very careful in what we do even as ancillary revenue is becoming critically important to help keep a check on fares," said a senior airline official. 

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