The art of the skilled upsell has long been considered a lucrative strategy in the travel industry. After all, the buyer's journey is littered with opportunities to cross-sell additional products and services to enhance the customer's experience. From airport lounge access and seat upgrades to premium rooms and sightseeing tours, when an offer is timed perfectly in the sales process and given an appropriate context, businesses are finding that now, more than ever, travellers are receptive to perfecting and personalising their trip.
Highlighting the fact that ancillary services are having their hey-day comes the news that some of the world's leading airlines now earn more than a third of their revenue from add-on services. The IdeaworksCompany 2015 Top Ten Airline Revenue Ranking report, a study sponsored by CarTrawler, revealed that top airlines had seen a steady rise in ancillary revenue over the past seven years to current sky-high figures.
Today, the revenue from add-on services ranges from approximately $1 billion for Alaska Airlines and as much as $6.2 billion for United Airlines with the top three airlines in the chart - Spirit, Allegiant and Wizz Air - earning more than a third of their overall revenue from ancillary sales. The research demonstrates a huge jump in this form of profit from 2008 when ancillary revenue totalled at roughly one-fifth of the overall revenue for airlines such as Ryanair and Allegiant.
The top 10 airlines in terms of ancillary revenue as a percentage of total revenue were:
Spirit - 43.4%
Allegiant - 37.6%
Wizz Air 36.4%
Alaska Air Group 19.5%
The Florida-based airline, Spirit, also narrowly beat Jet2.com to the top of the chart documenting ancillary revenue earned per passenger with a total of $51.80 compared to $50.84.
When it comes to the most profitable ancillary services for airlines - after fares and sales which accounted for 52% of Spirit's overall revenue - checked-in bags accounted for 18% whilst online and call-centre fees accounted for 14%.
The research shows there is a growing market for those little perks and extras that turn a trip into an experience and savvy travel businesses would do well to take a long, hard look at the journey their customers take to plot personalised offers at various touchpoints along the way.
Easier said than done, perhaps? Not when you have the assistance of experts in the field of travel technology. **If you would like more information on digital solutions which can help lead your customers through a seamless and personalised booking experience (and maybe boost your bottom line along the way) contact us today