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Ancillary Revenue still top priority for airlines

Research by Ancillary Revenue (AR) specialists Collinson Latitude has revealed that 63% of airlines have a formalised AR strategy in place, and of those that don’t, 61% intend to implement one in the next six months, however the majority still fail to focus on the customer. The research, conducted in conjunction with Airline Information shows, not surprisingly, that 44% of those surveyed considered pure revenue the ‘one key metric’ used to measure AR strategies.

In fact, only 7% of the global airlines surveyed said that customer satisfaction or customer insight was their key measurement. ‘Profit per customer’ was the second most popular metric, with 28% of those surveyed saying it was the most important metric.

Janet Titterton, Business Planning Director, Collinson Latitude explains; “Obviously the key to an ancillary revenue strategy is to generate additional income, however in our experience, appreciation of the customer’s needs in the first instance delivers far better commercial results in the long term. To achieve sustainable growth look to develop long term relationships and formalise a strategy that encourages loyalty and drives advocacy to maximise your return on the relationship. If your starting point is pure revenue, assess the opportunity cost of short term profits. You could risk implementing a complicated AR strategy that actually alienates your customers.”

In the face of an uncertain future for the airline industry, it’s clear that ancillary revenue remains a priority. Nearly 65% of those surveyed are expecting to grow their ancillary revenue profit by between six and 20% in the next year, and 61% say their role has changed to incorporate more focus on ancillary revenue in the light of the financial crisis.

Titterton concludes; “Clearly, ancillary revenue is still seen as a key growth area for airline brands, particularly as the wider economic environment is still so uncertain. We would advise the huge number of airlines looking to implement or invest in their AR strategies to do so with the customer firmly in mind. That means effort needs to be applied to gaining insight from customer data and travel purchase behaviour. Only then can you put in place a strategy that will position you to thrive when the economy recovers.”

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Tatiana is the news co-ordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy. She holds a Bachelor degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.

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