PhoCusWright Predicts Airline Ancillary Fees Will Expand

PhoCusWright is releasing a new report, “PhoCusWright’s Airline Ancillary Services: Redefining Travel Distribution (or Not).” It covers airlines new strategy of generating incremental revenue by unbundling services and amenities and charging for them separately, or bundling them into fare families.

Fees and the introduction of “fare families” have proved a highly successful revenue driver for air carriers that have been suffering from years of losses. In 2009, U.S. airlines earned nearly $8 billion in revenue from ancillary services, and revenues will soar even higher in 2010. Fees for everything from meals and baggage (checked or carry-on), to extra leg room or travel by an unaccompanied minor have kept the registers ringing.

The fees are here to stay, according to PhoCusWright. Airlines will keep adding new products and services in-flight, pre-flight and post-flight, from on-demand movies to wireless connectivity, including tie-ins with partners such as hotels, car rental companies and ground transportation.

ATPCO, a leader in air distribution, now lists more than 100 industry sub-codes for a la carte services. Everything but the plane will be for sale, and not just at the time of purchase but up to and during the flight. As a result, air travel content is no longer just a simple ticket.