Ancillary revenue covers any “revenue beyond the sale of tickets that is generated by direct sales to passengers, or indirectly as a part of the travel experience”. So while charges for baggage and seat choice are by far the biggest two categories, it also includes wifi access or onboard food and drink sales, as well as revenue from frequent flyer programmes (such as selling miles or points to partners) and commission from car rental sales via the airline website, for example. It’s easy to see why airlines are fans of “unbundling”.


It’s a competitive market, and offering a low air fare helps to attract the customer in the first place, at which point it’s easier to sell them the basics, plus tempt them with upgrades. It’s already par for the course in retail travel, where consumers are well used to paying for their extras via simple, user-friendly websites.


TAKING STOCK So how can travel buyers maintain visibility on what is being spent on ancillaries? First, look at how you are currently tracking spending on ancillaries, if at all. For some travel buyers this will be more urgent than others – short-haul flights in the US are heavily unbundled and, therefore, prone to “leakage”, whereas long-haul, business class flights from Europe still largely come with everything included. Yet with the environment fragmenting rapidly, it pays to set up systems now to avoid confusion further down the line. One buyer we spoke to noted that it would be “inconvenient and not particularly compliant to book a flight with a TMC, then book the extras with the airline. But, in practice, we could set up the airlines as vendors directly with our company. So it’s not beyond the realms of possibility that a direct retail link could be achieved with carriers.”


buyingbusinesstravel.com 2019 JANUARY/FEBRUARY 133


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