– At the Aviation Festival Americas 2018 event held in Miami from May 8th to the 9th, a number of high level executives gathered to provide insight on current and future air transportation trends, share knowledge and connect with peers around the world.
International consultant Mr. René Armas Maes moderated the ancillary revenue panel, a key trend among carriers these days and an industry over USD 70 billion per year. In this occasion, Mr. Chris Amenechi, Vice President, Pricing and Revenue Management at Copa Airlines, Ms. Alison Short, Sr. Director, Revenue Management at Air Canada, Mr. Rana Ghosh, Sr. Director Ancillary Services at Spirit Airlines and Azim Barodawala, CEO at Volantio Inc., joined the panel. The panel discussion focused on the next frontiers of unbundling and dynamic bundling for Low-Cost Carriers ("LCC") and Ultra Low-Cost Carriers ("ULCC"), hybrid carriers as well as Long Haul Low-Cost and Full-Service Carriers (FSC). In addition, how to drive incremental revenue from passengers and optimize revenues while achieving higher customer satisfaction levels and finally the role of technology in pushing
aggressively ancillary revenue were discussed.
"Today, we can observe more than 70 ancillary revenue options being offered by carriers at pre-flight, in-flight, post-flight and related to trip and airline loyalty services. Moreover, other options are being tested and introduced to the marketplace including collaborative opportunities between airlines and airports that you don"™t see that often being pursued but are certainly an important opportunity to optimize revenues for both", said René Armas Maes, Managing Director at Jet Link International LLC, Chairman of Aviation Festival Americas and Airline CEO keynote panel moderator.
As of first quarter 2018 earnings call, Spirit Airlines – an ULCC – ancillary per passenger reached USD 55.30 while its fare revenue per passenger was USD 52.40 showing an important trend among ancillary revenue champions which generate the highest ancillary revenue as a percentage of total operating revenue. In this example, Spirit Airlines is extracting more from non-ticket revenue per passenger segment or known as ancillary revenues than from the value of its fare revenue per passenger segment.
"Airlines continue to focus on customer data analysis, dynamic pricing and bundled offerings to drive revenue upward. As airline fares continue to show a modest downward trend compared to last year and as Cost per Available Seat Mile or commonly known as CASM – a key performance metric for airlines – continue to increase due to a 30% higher oil prices than last year and labour and maintenance costs are expected to accelerate this year, airlines from FSC to ULCC have recognized there is value in crafting a sound ancillary revenue strategy based on strategic passenger profiling, cabin and product segmentation analyses in order to optimize revenues, profitability and margin", commented Mr. René Armas Maes.
