Ancillary revenues up 22 percent as airlines extract cash

first_imgPhoto: Ruthann/commons. Airlines are getting smarter at extracting additional cash from passengers with a wider range of charges, fees and commissions expected to boost ancillary revenues by 22 per cent this year.The latest estimate of ancillary revenue from CarTrawler and IdeaWorksCompany predicts the cost of extra charges and revenues from areas other than fares will reach $US82.2 billion in 2017, with carriers such as Frontier, Ryanair, Spirit, and Wizz continuing to lead the charge.Read: World’s Best Airlines 2018That translates to just over $US20 per passenger for the 4.1 billion travelers expected to take to the air in 2017, or $US13.96 when the impact of frequent flyer programs is removed.Ancillary revenues have become big business for airlines and the 2017 study analyzed 184 airlines to arrive at its projection of activityThe report estimates the global figure has risen 264 per cent from the $US22.6 billion in ancillary revenues collected in 2010 to make up more than a tenth of 2017 global airline revenue.Ancillary revenues cover a wide a range of activities. These include additional “a la carte” passenger charges beyond the cost of a ticket for extras such as more legroom, food, drinks and luggage.They also include less obvious revenue streams such as the sale of frequent flyer points to partners and commission from hotel bookings.Low-cost carriers are the traditional masters of ancillary revenue and the report estimated the leading LCCs in 2016 derived almost 31 per cent of their revenue from extras, up from 25.5 per cent in 2016.These ancillary revenue “champs”  — carriers such as Ryanair AirAsia, EasyJet, Jetstar, Frontier and Spirit — represented 28 per cent ($US4.1 billion) of the 2017 increase.But it noted these carriers were changing to offer more options for business travelers, including fare bundles with more flexibility, better seating, fast-track airport service and, in some cases, frequent flyer benefits and lounge access.At the same time, traditional airlines were moving more aggressively to embrace “a la carte” practices such as differentiated seat pricing and fare bundles.An  IdeaWorksCompany analysis of 2016 revenue results showed traditional carriers and US majors accounted for $US32.8 billion of the $US57 billion earned from a la carte activities in 2016. This compared to $US16.8 billion for the ancillary revenue champs and $US7.4 billion for other low-cost carriers.Major US carriers, which contributed $US4.6 billion to the 2017 increase, have now widely introduced domestic basic economy pricing and are looking at introducing it on trans-Atlantic routes.The percentage of revenue earned from ancillary fees by US carriers jumped from 12.3 per cent in 2016 to 14.2 percent in 2017 thanks to a combination of frequent flyer revenue and baggage fees.“With few exceptions, airlines all over the world are moving to a la carte methods to provide more choices for consumers while boosting ancillary revenue,’’ the report said. “The pace of ancillary revenue activity quickens when major alliance members, such as Air France/KLM, American, Lufthansa, Qantas, and United embrace ancillary revenue methods.“The changes have a ripple effect through the oneworld, SkyTeam, and Star Alliances which encourages member airlines to adopt the same methods to smooth commercial and operational connections.’’The report noted that airlines in America, Europe and Australasia that had introduced basic economy fares found that more half of passengers elected higher priced bundled options.“When this activity is matched by an ever-growing pool of airlines, the result is billions more ancillary revenue,’’ it said.Traditional airlines outside the US accounted for 41 per cent of the total increase in ancillary revenues 2017, or $US6.1 billion, as the contribution to overall income rose from 5.8 per cent to 6.7 per cent.Ancillary revenue at these airlines included areas such as excess baggage, extra legroom seating and revenue from frequent flyer partners.last_img read more

Weak domestic demand tempers Qantas record Q1 revenue

first_imgPhoto: Steve Creedy Qantas has started the 2020 financial year with a record first-quarter revenue but continues to see weak domestic demand and faces some international headwinds.The airline said in a trading update that total group revenue rose 1.8 percent to a record $A4.56 billion while unit revenue was up 2.1 percent compared to the same quarter in 2018..But group domestic unit revenue fell by 0.9 percent due to “mixed market conditions” and Jetstar’s unit revenue was down 2.6 percent because of weakening demand in the price-sensitive leisure market.Strengthening resources industry traffic helped offset weaker demand in other corporate sectors such as financial services and telecommunications but overall corporate travel demand was flat, the update said.Small business demand also slowed, although Qantas said its share of both business markets increased, and premium leisure demand remained steady.READ: VIRGIN poised to start japan services after draft Tokyo decision.Jetstar’s 2.6 percent fall in unit revenue accounted for most of the group’s domestic decline and was offset by higher load factors that supported growth in ancillary revenues.Driving the increase in group unit revenue was a 4.4 percent increase for the group’s international operations led by reduced capacity from competitors as well as network and fleet changes in Qantas International.Qantas International reduced its own capacity by 2.5 percent and saw unit revenue rise by more than 6 percent.Jetstar International’s revenue and capacity also grew in the quarter with a strong demand on leisure routes to Asia offsetting weakness in markets impacted by the strong US dollar.A bright spot for the group remained Qantas Loyalty which “continued to see strong revenue growth in line with expectations” and expects to announce new growth opportunities shortly.“The Group continues to perform well, with strength in key parts of our portfolio helping to offset softness in other areas,” Qantas chief executive Alan Joyce said.“Qantas International has seen significant upside from competitor capacity contracting more than anticipated, which is expected to continue for at least the remainder of the first half.”Joyce said the slower revenue environment would mean a strong focus on cost reduction “to make sure we keep delivering on our transformation targets.””Part of this is about taking opportunities to reduce complexity and constantly improving how efficiently we manage our business,” he added.Among the headwinds facing the group are the protests in Hong Kong, which will wipe $A25m off the first-half profit and prompting capacity adjustments.Other problems include the impact of the US-China trade war on freight, expected to cut full-year profit by $A25-30m, and foreign exchange expenses expected to increase non-fuel costs by $A25m in the first half.The group has fully hedged its fuel for the 2020 financial year, including the ability to benefit from significant price falls, and expects its first-half fuel bill to increase $A29m to $A3.98 billion. A worst-case scenario would see fuel costs rise to $A4.05 billionQantas will continue to keep a tight rein on capacity with group increases expected to be between 0.5 and 1 percent in the first half.“Domestically, published competitor capacity is set to increase despite the weakness in the market,’’ Joyce said.“The Qantas Group will maintain its strategic position in all parts of the market and therefore our total domestic capacity is expected to grow by up to 1 percent in the second half.”last_img read more

Op-Ed: Objects Aren’t Social

first_imgrichard macmanus Why Tech Companies Need Simpler Terms of Servic… I first began writing regularly about the Internet of Things about a year ago. Now it’s bubbling up in the mainstream press and we’re also beginning to see web apps that are attempting to reach, if not quite a mainstream audience yet, then certainly the iPhone and Android-toting geek community. We’ve moved beyond the cutesy Internet-connected bunny rabbits and we’re now onto barcodes to stick on everyday objects.A new web service called tales of thingsjust launched, which aims to attach stories to objects. It follows on from a similar service that got a good amount of press at SXSW this year, StickyBits. Both services want to get people to ‘tag’ real world objects, by sticking barcodes onto them and adding information about the object onto the Web (often via mobile phone). The idea is that this will make the objects ‘social.’ However, I think this is doomed to fail and here’s why… Tales of things asks on its homepage: “Wouldn’t it be great to link any object directly to a ‘video memory’ or an article of text describing its history or background? Tales of Things allows just that with a quick and easy way to link any media to any object via small printable tags known as QR codes.”Both Tales of Things and StickyBits are going to struggle to get mainstream adoption. And it’s not because people just won’t stick barcodes onto objects – although that is a short-term pain point that both of these companies will likely fail to overcome. No, they won’t get mainstream adoption simply because the Internet of Things isn’t going to be just another social network platform. What’s unique about the Internet of Things is that it adds a huge amount of new data to the Web and allows real-world objects to become part of the cloud network. For example, sensors on a busy road communicate with your car to tell you of impending heavy traffic. Or when you walk into a shop, the store messages your phone to tell you that an item you’ve been looking for is in stock and on special. I met StickyBits founder Seth Goldstein at SXSW and he told me that his company aims to create a “social object network.” Trouble is, I just don’t think that Internet-connected everyday objects have much social value. Say I tag a book that I bought and attach the following ‘memory’ to it: “I read this book in the summer of 2010, it was a great read. I’d give it a 4/5.” Even if I wrote a much more in-depth review, what value does that have on a single object? If I uploaded that review to Amazon.com, then it’s put into context and gets aggregated with other reviews to form ratings and other ‘wisdom of the crowd’ intelligence. But on the object itself – my copy of the book – the review has limited value. If a friend of mine happened to scan my book with their phone, they’d see my review…and then probably head straight to Amazon.com to see what other people thought. Or perhaps check out what their own social network thought, via an app like Glue (a social network based on the media you consume – see our most recent review).Objects aren’t social, they never were and they never will be. The real value of Internet-connected objects is that they can become part of the network, which means they can connect to one another and they add more data to the giant computer we call The Cloud. But social networks aren’t going to form around single objects, other than perhaps public ones – like the Eiffel Tower, for example. But then you are just talking about a location, which the likes of FourSquare and BrightKite can take care of. The Internet of Things is about utility, not social networking. Neither Tales of Things nor StickyBits offers much in the way of utility, that we can’t already get from sites like Amazon.com or existing social networks. Let me know if you agree, or not! Tags:#Internet of Things#Op-Ed#web A Web Developer’s New Best Friend is the AI Wai… Related Posts Top Reasons to Go With Managed WordPress Hosting 8 Best WordPress Hosting Solutions on the Marketlast_img read more

With Lynda.com, LinkedIn Aims To Help You Find Jobs—And Train For Them

first_imgkelly clay LinkedIn’s acquisition of the online-education site lynda.com sets up the professional social network for its own midlife career change—from your job-seeking assistant to your job-training aide.See also: Lynda.com Founder: I Was Educating Online Before Online Education Was CoolOf course, LinkedIn has been expanding from its original professional-networking roots for some time. Over the past several years, it’s turned itself into a major online publisher featuring regular career-related posts from ordinary members and “influencers” like Bill Gates and Deepak Chopra alike. It has also rolled out a number of interesting career-related tools, such as one that compares your trajectory to other people like you so that you can predict where your career might be taking you.But with its latest purchase—LinkedIn’s largest to date, at $1.5 billion—the network makes it possible for professionals to both identify skills they may need going forward, and then to acquire them quickly via lynda.com’s online training. The idea is clearly to turn the site into a sort of one-stop shop for all your career needs.Founded in 1995 by technical author Lynda Weinman and co-founder Bruce Heavin, lynda.com offers thousands of courses for learning technical, business and online-media skills. These courses, taught by industry professionals, instruction in everything from Photoshop, HTML and CSS to foreign languages and professional topics such as “integrated marketing.”Ryan Roslansky, LinkedIn’s director of content, describes it this way:Imagine being a job seeker and being able to instantly know what skills are needed for the available jobs in a desired city, like Denver, and then to be prompted to take the relevant and accredited course to help you acquire this skill.Lead photo by Mambembe Arts & Crafts Related Posts A Comprehensive Guide to a Content Audit Facebook is Becoming Less Personal and More Pro…center_img Guide to Performing Bulk Email Verification The Dos and Don’ts of Brand Awareness Videos Tags:#careers#LinkedIn#Lynda Weinman#Lynda.com#online education last_img read more