In reports for the first quarter of 2022 recently published by Israir, it was reported that the airline’s revenues from ancillary products (suitcase addition, seating, etc.) jumped to 7% of total revenues compared to 3% in 2019. In the median reports it published EasyJet Recently, it reported a 9% increase in sales of extras compared to the corresponding median in 2019, and they totaled £ 513 million – a volume equal to half of the company’s sales turnover from tickets alone.
EasyJet and Israir are not alone. In recent years, airlines have been increasing their revenue stream from the sale of ancillary servicesAnd get out of the base price of the flight, inspired by the low-cost carriers that led the trend. Thus, if in the past a giftFor example, we paid $ 500 for an all-inclusive flight ticket (even a service we do not need), today the pricing has moved to a base price and a separate purchase of flight services. Over the years, the pricing of more and more services is calculated separately – from seating to a drinking bottle. Sometimes in this calculation we will pay more than the same total price we paid in the past.
Data released by consulting firm IdeaWorks recently shows that in the distribution of income from extras paid by passengers beyond the flight ticket, about 31% comes from paying for luggage. Among low-cost companies, this is about 36%, and the average among American companies drops to about 11% – since most of the passengers there are members of frequent flyer clubs, which provides benefits and exemption from paying for luggage. However, it is still a significant addition derivative for American companies as well.
Additional sources of income based on surcharge payments are early seating and check-in (31%), frequent flyer club points sales (15%), in-flight service (12%, food, wifi or duty free), and round-trip services such as Car for rent or insurance (11%).
Without a uniform policy
Data from the Statista website show that in 2021 the airlines accumulated revenues of about $ 66 billion from the sale of extras – an increase of about $ 8 billion compared to 2020. In 2019, which was a record year (4.55 billion passengers), the airlines accumulated revenues of about $ 66 billion. $ 110 billion from the sale of add-ons, three times the volume of revenue on this segment in 2011.
Prices for toppings vary from company to company, and according to the weight of the luggage. At Israir or Arkia, for example, $ 40 should be added in the direction of approxBuda (weighing up to 23 kg), while EL AL Lite (base) cardholders will pay $ 90 for adding luggage. At Wizz Air, the baggage allowance (up to 20 kg) can range from $ 9 to $ 90, and Bryanair The supplement may reach about 60 euros. The low-cost menu of the Low Cost Company also includes seating and a food and drink menu.
A company like Ryanair has long not relied on profits from ticket sales alone, which is also why it can offer individual tickets from time to time at a price of 10 or 20 euros. To streamline processes at the already congested airports, and to increase revenue, in most cases those who pay for luggage in advance will pay less than those who do so at check-in.
Each company has its own policy – in one of the luggage allowed for boarding a hi-fi planeA up to a weight of 8 kg, otherwise the weight is 7 kg. In one, the addition to the luggage is up to a weight of 23 kg and in the other up to 20 kg, and it is also possible up to 10 kg.
It should be noted that although more and more companies are putting out services for sale, and at the same time, the price of adding luggage is skyrocketing over the years, there are still some companies that do not charge a price for luggage. These include Singapore Airlines, Cathay Pacific, Corian Air, Turkish Airlines, Emirates and more.
The chaos at the airports
IdeaWorks’ annual report clearly shows that passengers’ extra expenses constitute the companies’ significant revenues, and the graph is on the rise – except for a temporary pause with the decline in passenger traffic during the corona period. so, American Airlines The world’s largest airline, concluded 2021 with sales of $ 1.22 billion on baggage allowance, 10 times more than in 2007. The average turnover per passenger rose from one dollar in 2007 to $ 7.5 in 2021 total.
The report also presents data from the American low-cost company Spirit Airlines, whose revenue turnover from extra payments on luggage increased from $ 29 million in 2007 to about $ 663 million in 2021. The average per capita income jumped from $ 4.15 to $ 21.5.
According to data gathered for the summary of last April, it appears that the global turnover of airlines from extras paid by passengers for their luggage has reached about $ 21 billion. While this is a lower amount than the record broken in another month in 2019, which stood at about $ 33 billion, “what is interesting is the continued growth in the companies’ revenue rate as a result of the sale of an extra to carry a suitcase for the flight,” the report said.
The idea was derived by the Legacy companies (traditional companies) from low-cost companies, which separated the components of the flight ticket to paid services. According to the report, the idea may have been adopted – but its implementation less so. Passengers on low-cost carriers are much more “educated” when it comes to arriving at check-in with excess luggage (for which they will pay fines), or when it comes to the date of payment for luggage.
If you add to the load equation at airports these days also arguments about luggage, or passengers starting to move equipment from suitcase to suitcase at check-in stations – unwanted chaos is obtained. Into this should be weighed the suitcases that do not reach their destination, and remain on the ground. The report criticizes the companies that “enjoy the extra that passengers pay for luggage, but do not invest around it, for example through luggage tracking apps. In this way they could significantly upgrade the entire passenger experience, in terms of luggage and in general.”
The report mentions a survey conducted in the United States among 10,000 passengers, which shows that 49% of American passengers book direct flights on airline websites, 17% book through the airlines ‘apps, and 7% on the companies’ call centers. B is of domestic flights, so it is a market that relies less on travel agents.
In light of the survey findings, IdeaWorks believes that “73% of passengers have the potential to pay extra for luggage when booking, and this is where the technological side comes in that can streamline the process. “The friendlier the process, the greater the companies’ revenue. And the more confusing the process, the less the traveler will want to spend.”