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Qantas ‘earning almost $60 per passenger in ancillaries’

July 30, 2019 Headline News No Comments Email Email

 

Qantas and Virgin Australia are raking in more money per passenger from added extras than most other airlines in the world, a new report indicates – and for Qantas the secret lies in its frequent flyer program.

Airline ancillary revenue is soaring worldwide. Qantas generated USD 41.15 (AUD 59.60) per passenger from it last year – putting it fifth in the league worldwide, behind Britain’s Jet2.com and ahead of United Airlines.

The Qantas result was 160% higher than its result of 10 years ago, in 2008.

The figures are included in a report released by IdeaWorks, a company founded in 1996 as a consulting organisation building airline income through ancillary revenue, loyalty marketing and a la carte shopping.

Ancillary revenue is the money that airlines earn for services other than just flying passengers from one point to another.

The report, which compares airlines worldwide, says Virgin Australia reaped USD 34.74 (AUD 50.32) on the same basis. IdeaWorks did not have the 2008 figure to make a 10-year ancillary comparison for Virgin Australia.

The IdeaWorks’ list of the world’s Top 10 carriers, arranged on the basis of the amount of ancillary revenue per passenger, consists predominantly of US-based airlines.

The four airlines ahead of Qantas on the list are all low-cost carriers, (in order): Spirit (which earned USD 50.94 per passenger –  that’s AUD 73.81  – from ancillaries, topping the world), then Allegiant, Frontier and Britain’s Jet2.

Virgin Australia came eighth.

Virgin Australia A330-200

Jet2 came fourth and Malaysia-based low-cost carrier Air Asia X came ninth. All other carriers in the top 10 are either American or Australian.

Top 10 Airlines – Ancillary Revenue per Passenger
Annual Results – 2018

(in US dollars)

Ancillary Source 2008 Comparison

(in US dollars and % increase above 2008)

$50.94 Spirit Various $18.61 174%
$50.01 Allegiant Various $26.66 88%
$47.62* Frontier Various $3.70 1187%
$43.91 Jet2.com Various $19.04 131%
$41.15 Qantas Airways FFP $15.83 160%
$36.64 United Various $22.86 60%
$35.56 American Various $19.67 81%
$34.74 Virgin Australia Various Not available
$34.28 AirAsia X Various Not available
$32.70 Hawaiian Various Not available
2018 and 2008 carrier results were based upon 12-month financial period disclosures.
* IdeaWorksCompany estimate based upon past disclosure and updated for current report. Local currencies converted to US dollars at July 2018 and July 2008 rates of exchange.

The source of the ancillaries is listed as “various” for all carriers except Qantas. With Qantas, the source is listed as “FFP” – frequent flyer program – but it’s banks and other companies with rewards programs that are paying Qantas to reward customers’ frequent flyer points.

Qantas 787-9 Dreamliner

Analysis from IdeaWorks noted:

“Qantas believes 35% of credit card spend in Australia is on Qantas co-branded credit cards.  That type of number should catch the attention of Australia’s secretary to the treasury. It’s easy to see why these are popular products for airlines operating in countries where consumers eagerly use credit and merchant credit fees are lightly- or un-regulated. The latter is used by banks to fund the purchase of miles and points from airlines.”

The IdeaWorks report is released in conjunction with Cartrawler, a business-to-business technology company concentrating on online car rental distribution for the travel industry.

CarTrawler and IdeaWorksCompany will release a 100-plus page compilation of results and overall rankings from the 70-plus disclosing airlines during September 2019. A companion report, scheduled for November 2019, will use these results to extrapolate the total ancillary revenue generated by a global list which exceeds 180 airlines.

You can download the CarTrawler Ancillary Revenue Series for 2019 here.

Written by Peter Needham

 

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