The Ancillary Revenue Boom

Discovering new ancillaries to add to tourism and flight packages is the new path the travel industry is taking to save itself after the critical blow of the pandemic, and these steps prove themselves again and again. This is?why this trend is so strong, and why you should consider adopting it.

Ancillary revenue is proving to be the light at the end of the tunnel for the travel industry in these difficult times.?After over 2 years of almost complete stagnation, airlines, travel agencies and many more professionals tend to look outside of their normal service scope?to rebuild their presence in the market, enlarge their cliental and maximize each and every deal. This is the root for the move into ancillary revenue optimization efforts, and the implementation of such efforts are the new main focus of the market. Within these efforts, there are those that are more beneficial, and we are here so that you will know what to put your focus on.?

Ancillary revenue in the travel industry?

Within the travel industry, ancillary revenue represents the income gained by the services and activities apart from the passenger transportation itself. Frequent flyer activity, baggage, and trip insurance are some known examples of where ancillary revenue can be generated from, but the market has since evolved greatly.?

Before the pandemic, ancillary revenue was rising exponentially and was increasing airline revenue by between 20%-50% depending on the airline. According to reports by IdeaWorkCompany in 2019, ancillary revenue came to nearly $110 billion. And while the severe impact of the pandemic didn't pass over ancillaries, the considerably stable trajectory of ancillary revenue surprised most airlines.?

Today, despite the increase in passenger traffic, the travel industry is still struggling to come out of its Covid-19 recession. Now, as the world has changed and technology advances, there are new opportunities to take advantage of. Nowadays, ancillaries grow in both?revenue and technology, and the focus is to create and adopt new and exciting ways that the market can expand on top of.Growing their revenue channels, airlines are looking to reshape their use of ancillaries, modernize their view on them, and invest in new expansions, and that is a huge opportunity for anyone in the industry.?

Utilizing AI for total revenue optimization

In a post-pandemic world, consumers' behavior evolves and so do their demands. This new unpredictability in travelers' behavior is leaving most airlines lost in the volatility of the travel industry today. not knowing how to predict and cater to their passengers' needs. Even so, By utilizing information generated by CRMs and ERPs, airlines can gain insights into trend forecasting, pricing strategies, and the successes of marketing and sales. If assessed and utilized correctly, this strategy is a fundamental tool for total revenue optimization. By using these strategies airlines can fix prices to maximize ancillary revenue and create new bundles for travelers to customize their own unique trips.

By using analytics from deep learning artificial intelligence some airlines are gaining newfound knowledge about their passengers, their behavior, and consequently, the ancillaries they are most likely to purchase.?

Having a more resonant understanding of the customers and their needs will help transform ancillary revenue for the travel industry.?

The rebirth of airline ancillaries

Up until recently, the focus for revenue has been mostly on core ticket prices. However, low-cost carriers have earned significant profits by being innovative in the way they make use of ancillaries. In separating the core prices of the seats from the rest of the services such as baggage, onboard food, and seat selection, they are setting a new standard and are inspiring the travel industry to be more creative with its outlook on the potential ancillary revenue holds.?

As customers are constantly met with plenty of alternatives, their awareness of the specific services they need is growing. Revenue optimization techniques are assisting airlines to predict the services that will be most relevant to travelers. However, these systems can only analyze what is already in use. Travelers are willing now more than ever to pay for ancillaries that offer comfort and convenience. Because of this, a new emphasis is being made on travel packages. Being one of the more versatile channels for revenue optimization, new and innovative services are beginning to show themselves. The technology of eSIM is opening up a new opportunity. By offering packages to connect the phone service to carriers in the destiny location, eSIM are the new ancillary service to keep an eye open for to increase ancillary revenue.

By changing the ticketing strategy from all-inclusive fares to a la carte options, airline ancillaries are more varied than ever before.?

From frequent flyer activity to seat selection, baggage, and priority boarding, to travel packages including car rentals, hotel bookings, event tickets, and eSIM packages, Airlines can now create a more comfortable and personalized experience for the customer by giving passengers a base fare and a wide variety of ancillaries to choose from.