SOURCE: IdeaWorks; ezRez Software, Inc.

IdeaWorks; ezRez Software, Inc.

September 08, 2009 08:30 ET

Airlines All Over the Globe Post Big Ancillary Revenue Gains -- 2008 Activity Jumps 345% to EUR 7.68 Billion ($10.25 Billion)

The 145-page Ancillary Revenue Guide by IdeaWorks Is Available September 8, 2009 and Highlights a la Carte Airline Leaders Such as Allegiant, Ryanair and United

SHOREWOOD, WI--(Marketwire - September 8, 2009) - Ancillary revenue and a la carte pricing became commonplace in travel during 2008 when major airlines throughout the world started charging fees for checked baggage, premium seating, soft drinks and more. The sickly patient known as the world's airline industry suffered through 2008 and only survived due to dramatic schedule cutbacks, the slow reversal of fuel prices and an "intravenous injection" of ancillary revenue.

Ancillary revenue and the magic elixir of baggage fees did not singlehandedly save the US airline industry. But it's easy to imagine the number of airline executives who silently murmured words of thanks for the millions of dollars it delivered to bottom lines during 2008. At the same time, low cost carriers around the world have been making continuous enhancements and are generating higher levels of ancillary revenue.

The combined result of this activity is reflected in the revenue reported in The Guide to Ancillary Revenue and a la Carte Pricing by IdeaWorks. The second edition of the Guide reveals ancillary revenue for calendar year 2008 rose nearly EUR 6 billion -- an amazing 346 percent increase -- above the worldwide results listed in the previous edition of the Guide.

                  Worldwide Review of Ancillary Revenue
                  =====================================
EUR 7.68 billion ($10.25 billion)     EUR 1.72 billion ($2.29 billion)*
Total Annual Result - Calendar Year   Total Annual Result - Calendar Year
            2008                                   2006
===================================   ===================================
* 2006 results were calculated in euros, the dollar value was re-stated
based upon a $1 = EUR 0.75 exchange rate.

Some carrier results were based upon the most recent fiscal year.

IdeaWorks has followed the success of the first-ever Guide on the topic of ancillary revenue with a second edition for 2009. The 145-page Guide to Ancillary Revenue and a la Carte Pricing by IdeaWorks, solely sponsored by ezRez Software, will be available for online purchase September 8, 2009.

The Guide is the result of research, interviews and analysis conducted during 2009 on a la carte pricing, commission-based services and frequent flier activities. The Worldwide Review of Ancillary Revenue Statistics has become a highly anticipated feature of the Guide. IdeaWorks analyzed financial statements from 92 airlines to develop a picture of ancillary revenue activity by carriers worldwide. Of the 92 airlines, 35 reported revenue breakdowns identifying ancillary activities.

The current top 5 list demonstrates how much has changed since the last Guide. Legacy airlines now fill the top three positions, which once included low cost carriers Ryanair and easyJet. And the ancillary revenue produced by individual carriers, such as United and Ryanair, has increased dramatically. The top 5 club now requires far more revenue to join -- in excess of EUR 450 million. That's more than any single carrier produced to join the prior top 5 list.

                 Top 5 Airlines - Total Ancillary Revenue
                 ========================================
  Annual Results - Calendar Year      Annual Results - Calendar Year
                2008                              2006
=================================    ===============================
EUR 1,650,000,000        American    EUR 416,116,752          United
================= ===============    =============== ===============
EUR 1,200,000,000          United    EUR 362,104,000         Ryanair
================= ===============    =============== ===============
EUR 1,125,000,000           Delta    EUR 189,476,508         easyJet
================= ===============    =============== ===============
EUR 625,350,240           Ryanair    EUR 134,662,086          Alaska
================= ===============    =============== ===============
EUR 458,622,000            Qantas    EUR 63,407,000       Aer Lingus
================= ===============    =============== ===============
Source:  Worldwide Review of Ancillary Revenue Statistics from the
2008 and 2009 Ancillary Revenue Guide.

Some carrier results were based upon the most recent fiscal year.

The Worldwide Review of Ancillary Revenue Statistics from this year's Guide demonstrates the success of a la carte pricing and other activities such as frequent flier programs. While ancillary revenue as a percent of total revenue remains the best measure of overall revenue prowess, the 2009 edition reveals many surprises. For example, US-based Allegiant Air appears on the top 5 list for the first time and unseats Ryanair from the #1 position.

Top 5 Airlines - Ancillary Revenue as a % of Total Revenue
==========================================================
           Annual Results       Annual Results -
            - 2008 Guide          2006 Guide
         =================== =====================
         22.7%     Allegiant      16.2%    Ryanair
         ====     ========== =========  ==========
         19.3%       Ryanair      14.2%    Vueling
         ====     ========== =========  ==========
         15.5%       easyJet      12.8%  Allegiant
         ====     ========== =========  ==========
         14.8%      Jet2.com       9.0% Air Deccan
         ====     ========== =========  ==========
         14.1%       Vueling       8.8%    easyJet
         ====     ========== =========  ==========
Source:  Worldwide Review of Ancillary Revenue
Statistics from the 2008 and 2009 Ancillary Revenue
Guide.

"At the beginning of this decade, 'ancillary revenue' was not a buzz word or strategy that businesses were building departments around with multi-million-dollar revenue targets, but that has changed," said Tina Fitch, co-founder, president and CEO of ezRez Software, sponsor of The Guide to Ancillary Revenue and a la Carte Pricing by IdeaWorks. "In today's tightened market, we're seeing airlines and other travel companies broadening the relevance of their brands to a larger set of consumers by adding more travel offerings as means to diversify revenue and increase customer loyalty. The Guide is a must-read for any travel executive who wants to innovate, compete more effectively and boost a company's long-term viability."

The following is a sampling of the information and best practices described in the guide:

--  United Airlines generates an average of EUR 4.36 ($5.81) from checked
    baggage charges per US domestic passenger.
--  Southwest Airlines sells about four Business Select tickets per flight
    on average and the program contributed approximately $75 million (EUR 56.3
    million) in revenue in 2008.
--  The Qantas Frequent Flyer program contributes whopping revenue of EUR
    11.87 ($15.82) per passenger -- a record among the world's airlines.
--  AirAsia X, the Malaysia-based low cost airline, realizes EUR 2.06
    million ($2.75 million) from the sale of pre-order meals to passengers on
    its long haul flights such as London-Kuala Lumpur.
    

The Guide includes the following "what-works-best" and "how-to-do-it" sections that describe how airlines can maximize ancillary revenue based upon leading carriers in Europe, North America, and Africa:

--  The a la Carte Handbook
--  Successful Airlines Will Focus on These Five Strategies
--  Building a Better Revenue Aware Airline
--  How to be Better than Ryanair
--  United and SAS Use a la Carte Pricing -- You Can Too
--  Lessons Learned from Lodging
--  Tales from the Ancillary Revenue Front - Executive Interviews
    

NOTE: The Guide to Ancillary Revenue and a la Carte Pricing by IdeaWorks will be available online for purchase, and will also be distributed by ezRez free of charge at the Airline Information "FFP - ARAC Mega Event 2009" in Los Angeles. Simply stop at the ezRez booth at the conference to pick up your free copy of the Guide. Learn more about this October 22/23, 2009 event by visiting the Conferences page under the News and Events tab at the ezRez.com website. Jay Sorensen, president of IdeaWorks, will make keynote presentations on a la carte pricing and frequent flier topics at the Mega Event.

Not attending the conference? Or do you require immediate ancillary revenue satisfaction? Order a copy of the Guide online starting September 8, 2009 for US$449 per copy (a $50 savings off last year's price of $499). The Guide will be available for purchase and immediate download as a PDF at: AirlineInformation.org/guide.

About ezRez:

ezRez Software, Inc. enables its partners to sell any combination of travel products including air, car, hotel, trip activities, packaging and travel insurance to anyone, anywhere in the world. Its robust Software-as-a-Service (SaaS) platform allows clients that want to sell multiple travel products to easily 'plug and play' software to launch full online travel agency functionality -- including access to more than 200,000 travel suppliers -- in a matter of months while retaining the look and feel of a customized implementation at a fraction of the cost. ezRez clients include some of the world's largest airlines, hotels, travel agencies and banking loyalty programs such as American Airlines, American Express, JetBlue, InterContinental Hotels, LAN Airlines, and Starwood Hotels & Resorts. Based in San Francisco, ezRez has secured $17.1 million in venture funding led by Canaan Partners with participation from Azure Capital Partners.

About IdeaWorks: IdeaWorks was founded in 1996 as a consulting organization building brands through innovation in product, partnership and marketing, and building profits through financial improvement and restructuring. Its international client list includes the hotel, airline, marine, railroad, consumer products and health care sectors. IdeaWorks specializes in ancillary revenue improvement, brand development, customer research, competitive analysis, creating partner-marketing strategies, cost reduction programs and business restructuring. Learn more at IdeaWorksCompany.com.

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