"Ancillary revenues" has been a buzzword/buzzphrase in the business for a while. Amadeus' Gillian Gibson talked about this at the Summit today. Top-line summary: ancillary revenues from airline related service yes; ancillary revenues from non-air services no.
Her argument was that ancillary revenues from the flight are within the airline's control and go straight onto the bottom-line without much dilution, while the money made from its hotel and car-hire partnerships is commission-only, with the profit nowhere near the amount of revenue.
Also, she suggested that airlines could lose brand integrity if the hotel was rubbish. And that airline customers wouldn't expect their airline to know about hotels. And that people don't necessarily book the hotel at the same time as the flight.
Amadeus has a range of products which help airlines sell the flight ancillaries, and this is where the technology company feels it should be focussed. She said Amadeus is "taking a bet" on the ROI being better for airline-related ancillary services technology.
I've lost track of how much money IATA thinks the airline business will lose this year, but if an airline came make money by selling seat allocation or charging for luggage, they will do that. Expect more not less carriers to charge for the sort of thing we used to expect to get for nothing, when we were paying £300 for a flight which now costs £80...
Fair point except airlines will continue to sell ancillary services to their customers because it costs them very little to set up, yet they earn ongoing commission. This is why services such as ours at http://www.epok.com will soon become attractive to airlines and travel portals.
The last thing airlines want to do is start charging for once free items. Would charging their customers attract people to fly with them, I don’t think so.