Airline ancillary revenue projections slashed by half for 2020

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Gains in airline ancillary revenue last year are said to have helped carriers during the "cold revenue winter of 2020."

The latest IdeaWorks Company and Cartrawler study reveals projections for 2020 earnings from ancillaries, with the total for the top 10 airlines slashed by more almost 50% compared to 2019's figures.

Total ancillary revenue for the top 10 carriers in 2019 was $46.6 billion compared to a projected total of $23.7 billion for 2020.

The report lists the three large U.S. carriers as the top ancillary revenue earners for 2020, with American Airlines expected to be down 48% to $3.9 billion, United down 49% to $3.4 billion and Delta down 53% to $2.9 billion. 

Overall, airlines are expected to bring in ancillary revenue of just over $64 billion in 2020, 41% down on 2019.

Projections are based on 2019 ancillary revenue as a percentage of total revenue statistic adjusted to take in losses in airline revenue and passenger volumes because of the pandemic.

Despite the current bleak picture, the report reveals ancillary revenue rates are holding, IdeaWorks forecasts.

An analysis of second quarter 2020 results of 17 carriers compared with the same period in 2019 shows a modest increase in the ancillary revenue average, expressed as a percentage of total revenue, from 21.7 % in early 2019 to just over 22% in early 2020.

The report goes on to say that of the 17 airlines, which includes Air Canada, Finnair, Ryanair, Southwest and United, half showed increases in ancillary revenue and half showed declines.

Some standout gains, for example, include AirAsia which revealed in its Q2 financial report high percentages of passengers purchases trip insurance, baggage and assigned seating.

Meanwhile, Jozsef Varadi, CEO of Wizz Air, says he does not anticipate the pandemic will affect ancillary revenue gains per passenger, which were expected to go from €0.50 to €1 for 2020.

Source: PhocusWire

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