A research conducted by IdeaWorks Company,  a consultancy on airline ancillary revenues, and CarTrawler, an online provider of car rental distribution systems, project that airline ancillary revenue will reach $49.9 billion worldwide in 2014. The research was applied to 180 airlines to provide a global projection of ancillary revenue activity by the world’s airlines in 2014.

Ancillary revenue is generated by activities and services that yield revenue for airlines beyond the simple transportation of customers from A to B.
This wide range of activities includes: commissions gained from hotel bookings, the sale of frequent flier miles to partners and the provision of a la carte services, providing more options for consumers and more profit for airlines.
Revenue from optional services, such as onboard sales of food and beverages, checked baggage, premium seat assignments, and early boarding benefits was determined to represent $28.5 billion of
the projected global 2014 total.
The smaller share, at $21.4 billion, comes from non-fee activity such as the sale of frequent flier miles to program partners, and commissions earned on the sale of services to travelers, such as hotel accommodations and car rentals.

Analysis performed by IdeaWorksCompany during the past five years reveals natural groupings (or categories) based upon a carrier’s ability to generate ancillary revenue.
The “percentage of revenue” results associated with four defined categories have been applied to a worldwide list of operating revenue disclosed by 180 airlines.

The following describes the four categories:

Traditional Airlines.
This category represents a catch-all for the largest number of carriers. Ancillary revenue activity may consist of fees associated with excess or heavy bags, extra legroom seating and partner activity for a frequent flier program.
Most European carriers now charge fees for the first checked bag. The average percentage of revenue increased to 3.6% from 3.1% last year. Examples include Etihad Airways, China Southern, Lufthansa, and Avianca.

Major US Airlines.
US-based majors generate strong ancillary revenue through a combination of frequent flier revenue and baggage fees. The percentage of revenue for this group remained at 9.9%,which was the same rate that applied for 2013. Examples include Alaska, American, and Delta.

Ancillary Revenue Champs.
These carriers generate the highest activity as a percentage of operating revenue. The percentage of revenue achieved by this group grew to 23.6% from 21.6% for 2013. Examples include AirAsia X, Allegiant, Pegasus,and Wizz Air.

Low Cost Carriers.
LCCs throughout the world typically rely upon a mix of a la carte activity to generate good levels of ancillary revenue. The percentage of revenue for this group was 12.1% and is above last year’s 10.5%. Examples include IndiGo, Jazeera Airways, Jeju Air, JetBlue, Norwegian, and Spring Airlines.