Europe`s top four LCC generate millions of euros from non-ticket sources in 2005
Thursday, October 12, 2006
The non-ticket sources was a good revenue source for Europe`s low cost carriersin 2005 but U.S. frequent flier programs produced revenues estimated at 2.5 billion Euros (more than US$3 billion) and better per passenger results. The
IdeaWorks Company has analyzed non-ticket revenues, also called ancillary revenues, for airlines in the United States, Europe and throughout the world.
Michael O`Leary, Chief Executive of Ryanair, Europe`s largest low cost carrier, wants to offer free airline tickets by replacing traditional ticket sales with revenues produced by ancillary activities. His statement reflects how Europe’s budget airlines have morphed the Southwest Airlines model of providing overall value into an a la carte style of offering ultra-low fares and charging consumers for services such as checked baggage.
An IdeaWorks analysis reveals growing distinctions between the LCC model that is prevalent in the United States and that which is developing throughout the world.
Here is a sampling of the observations from the analysis:
- European low cost airlines are more likely to charge consumers for services such as advance seat assignments, checked baggage, onboard snacks and drinks, and purchasing tickets with a credit card.
- IdeaWorks estimates Ryanair’s aggressive use of a la carte pricing generated ancillary revenues of €7.76 (US$9.77) per passenger.
- United’s Mileage Plus frequent flier program posted amazing ancillary revenue results of €9.40 (US$11.98) per passenger.
- AirAsia, Air Berlin, easyJet, Ryanair, SkyEurope, Virgin Blue, and WestJet are among the airlines that now list ancillary revenues in their financial statements.
Michael Verikios
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Thursday, October 12, 2006
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