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Airlines expected to collect $42.6 billion in extra revenue in 2013

October 30, 2013|By Hugo Martin
  • Sales of food, drinks and other on-board extras are expected to help generate $42.6 billion for airlines worldwide.
Sales of food, drinks and other on-board extras are expected to help generate… (Virgin America )

Airlines still make most of their money flying you from point A to point B. But a bigger share of that revenue now comes from selling you food, drinks and entertainment during the trip.

Airlines worldwide are expected to collect $42.6 billion from passenger fees, the sale of frequent flier miles and other sources in 2013, an 18% increase from last year.

The forecast by Wisconsin-based IdeaWorksCompany, a consultant to the airline industry, also shows that such fees and commissions have become a bigger part of the airline industry's revenue stream.

In 2013, passenger fees and other so-called ancillary revenues are expected to represent 6% of all revenues for airlines worldwide, compared with 4.8%  in 2010, according to IdeaWorksCompany.

Of the $42.6 billion that airlines are expected to collect in 2013, $23.7 billion is projected to come from onboard sales of food, drinks and seat upgrades and revenue from check bag fees, according to IdeaWorksCompany.

The balance is expected to come from the sale of frequent flier miles and commissions from travel services, such as hotel reservations.

"A la carte activities, such as those linked to fees charged for checked bags, on-board cafes and early boarding privileges, are a big part of the ancillary revenue story," said Jay Sorensen, president of IdeaWorksCompany.


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