Strategies Adopted:
Bundling and Unbundling: Airlines employ bundling strategies to offer packages that combine various ancillary services such as baggage, seat selection, and onboard amenities. Conversely, unbundling involves selling services separately, allowing passengers to customize their travel experience.
Loyalty Programs: Enhancing loyalty programs with rewards for ancillary purchases encourages passengers to opt for additional services, driving revenue and customer retention.
Digitalization: Leveraging digital platforms and mobile apps enables airlines to streamline ancillary service offerings, making it easier for passengers to access and purchase services before and during their journey.
Partnership and Alliances: Collaborations with third-party service providers allow airlines to expand their ancillary service portfolio, offering passengers a wider range of options such as hotel bookings, car rentals, and travel insurance.
Key Players:
Deutsche Lufthansa AG (Germany)
Delta Air Lines, Inc. (US)
American Airlines, Inc. (US)
Alaska Air Group, Inc. (US)
United Airlines, Inc. (US)
Southwest Airlines Co. (US)
Ryanair DAC (Ireland)
EasyJet PLC (UK)
Air France-KLM (France)
Air Canada (Canada)
Factors for Market Share Analysis:
Passenger Volume: Market share is influenced by the number of passengers served by airlines, as higher passenger volumes translate to increased opportunities for ancillary revenue generation.
Ancillary Service Offerings: The variety and attractiveness of ancillary services offered by airlines impact market share, with airlines offering unique and desirable services gaining a competitive edge.
Pricing Strategy: Competitive pricing of ancillary services relative to competitors plays a significant role in market share, with airlines offering competitive pricing or value-added services to attract passengers.
Customer Experience: Providing a seamless and positive customer experience, from booking to post-flight services, contributes to market share by enhancing passenger satisfaction and loyalty.
New and Emerging Companies:
AirAsia Group (Malaysia)
IndiGo (India)
JetBlue Airways Corporation (US)
Norwegian Air Shuttle ASA (Norway)
Spirit Airlines, Inc. (US)
Volaris (Mexico)
Wizz Air Holdings Plc (Hungary)
Allegiant Travel Company (US)
EasyJet plc (UK)
Air Canada (Canada)
Current Company Investment Trends:
Digitalization and Technology: Airlines continue to invest in digital platforms and technology solutions to enhance the booking experience, streamline ancillary service offerings, and improve customer engagement.
Ancillary Revenue Optimization: Investments are made in revenue management systems and analytics tools to optimize ancillary revenue streams through dynamic pricing strategies and targeted promotions.
Customer Experience Enhancement: Investments in improving onboard amenities, inflight entertainment, and personalized service offerings aim to enhance the overall passenger experience and drive ancillary revenue growth.
Sustainability Initiatives: Airlines are increasingly investing in sustainable ancillary services, such as carbon offset programs and eco-friendly travel options, to appeal to environmentally conscious passengers and align with corporate social responsibility goals.
Overall Competitive Scenario:
The airline ancillary services market is highly competitive, with key players adopting various strategies to differentiate their offerings, attract passengers, and maximize ancillary revenue. Factors such as passenger volume, service offerings, pricing strategy, and customer experience significantly influence market share. New and emerging companies bring innovation and competition to the market, while industry news and investment trends reflect ongoing developments in technology, partnerships, and regulatory changes shaping the competitive landscape.
Airline Ancillary Services Industry Developments
March 2021:dnata and Cebu Pacific Air (CEB) have expanded their long-term partnership in Asia. In addition to the past multi-year extension of an existing airport service contract at Sydney Airport (SYD), dnata has agreed to deliver a wide range of ground handling assistance to the airline at Melbourne Airport and Singapore Changi Airport.
June 2022: Emirates Flight Catering signed a partnership with Coca-Cola Arena. As the only F&B partner of Dubai's home of live enjoyment, EKFC will deliver a full range of catering and hospitality services, such as food production, menu development, and logistics, as well as service staff for all occasions and conferences.
