Northstar

FEATURE www.travelweeklyweb.com Ancillary Services in Asia Ho Hoong Mau, Director, Airline Distribution Division, Abacus. In recent years of economic crisis, airlines have found new ways to boost profi ts by charging ancillary fees for choice seats, baggage check-in, premium meals and other services. In a March 2011 posting by Stephanie Koch in eWireInformer, such fees raked in an estimated US$22 billion in global industry revenue in 2010. The number of airlines appearing in the ancillary revenue scene also rose from 23 in 2007 to 104 in 2010 according to an IdeaWorks study done last year. Among them were the "Big Three" consisting of United Airlines, American Airlines and Delta Airlines, who pioneered the charging for baggage check-in among the US major airlines. However, according to CAPA, Low Cost Carriers (LCCs) like Allegiant, Ryanair and easyJet led the charge in ancillary, whereby it accounted for more than 15 per cent of their total revenue. Ancillary services have not only become an enduring part of the US and Europe airlines' income statement, but have also created a buzz unlike other airline marketing strategies. For all the attention it received, these debates had mainly been focused on the markets in the west. So, how are airlines operating in Asia responding to this trend? In Asia Pacific, according to a Business Times report in April, Tiger Airways led the pack when it came to earnings from the sale of ancillary services, which accounted for 54 per cent of its total revenue for the nine 4 | ■ TRAVELWEEKLY ASIA | 16 AUGUST 2011 months ending December 2010. AirAsia's ancillary revenue component now accounts for 19 per cent of its total sales. Competitor Jetstar's ancillary earnings grew from about $2 million six years ago to some $35 million now. However, perspectives on and outlook of ancillary services in Asia are still lacking. Abacus recently conducted a market survey with airlines and travel agencies whose operations are in Asia. The survey provides not only information on their plans, needs and challenges of ancillary services but also valuable insights on its status and progress from an Asian perspective. Understanding Airlines' Perspectives on Ancillaries in Asia 1. From Abacus' survey, the merchandising strategies that airlines in Asia had implemented or are considering to implement are (in terms of order): 2. Offering premium/advanced seat assignments 3. Introducing fare families/branded fares 4. Paying for second checked bag 5. Selling advertising 6. Paying for meals onboard 7. Implementing call centre reservation fee 8. Charging for web booking fee www.travelweeklyweb.com

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