Baggage supplement, seat choice…: how the Covid has boosted airlines’ payment options

Payment options on board medium-haul flights were already on the rise before Covid. But like other pre-existing trends, the health crisis has greatly accelerated its development.

So much so that this additional source of income, from additional services such as baggage payment, seat selection or priority boarding, has sometimes become the main source of income for certain low-cost airlines. Facing the sale of dry flights.

Wizz Air, champion of supplements

The most spectacular example is that of Wizz Air. The Hungarian cheap airline , which claims to be “ultra-low cost”, generated 56% of the turnover for its 2021-2022 financial year, closed on March 31, thanks to its payment options. They collected a total of 931.4 million euros in one year, compared to 732.1 million for plane tickets. Two years ago, before the crisis, this ancillary revenue still represented only 45% of Wizz Air’s turnover.

At Ryanair, another fare supplement champion, this additional revenue was almost on par with ticket sales in the same 2021-2022 fiscal year. On average, each passenger of the first European low cost paid 27 euros for their flight and an additional 23 euros in payment options. Or 44% of the turnover of the group’s companies, compared to 36.7% before the crisis.

Recipes that no longer have anything incidental

As for its rival easyJet, whose economic model has always been closer to that of traditional companies, the share of options in its revenue fell from 21% in 2019 to 30% in the first half of its 2021-2022 financial year. Or 15 euros of supplements for an average ticket of 35 euros.

Three examples that are not isolated cases. Already in 2021, the CarTrawler/IdeaWorksCompany annual report, dedicated to ancillary income from air transport, had identified four low-cost companies, more than 50% of whose turnover was now made up of what used to be the accessory (the European Wizz Air, American Spirit and Allegiant and the Mexican Viva Aerobus) and nine above 30%. On average, the share of ancillary revenue increased from 12.2% to 14.4% of airline revenue across all sectors, according to CarTrawler/IdeaWorks, or $65.8 billion in 2021.

A change in behavior

This growing weight of complementary income is explained in part by the drop in the average price of flights. To win back their customers, European companies have very clearly lowered the prices of their calls… But not the price of additional services, the importance of which has therefore increased.

Unlike the prices of airline tickets, which are easily comparable on the Internet, the cost of checked baggage or in-flight services does not attract the same attention from customers, nor the same level of competition between companies.

But other behavioral factors have also contributed to the increased mana of payment options. According to Ryanair, more and more passengers want to choose their seat in advance, to travel as a family or as a couple. A concern that could be linked to the desire to limit the risk of contagion. For the same reason, an increasing number of passengers would opt for the choice of seats at the front of the plane, to be the first in and out.

Baggage, main source of income

The CarTrawler/IdeaWorks report also highlights strong growth in baggage surcharges, which are the main source of additional revenue. One of the explanations for this increase would be the lengthening of travel times and the concern of some travelers to take more things with them to prepare for the possibility of a possible confinement.

One thing is certain: airlines have competed in imagination to encourage their customers to pay extra for their luggage. In the last two years, all European low-cost airlines have tightened their rules regarding the number and size of hand luggage, while offering more and more packages, combining paid luggage with priority access on board and choice of seat . This is especially the case with easyJet, which recently launched several all-inclusive packages based on luggage size, the price of which varies according to demand, just like the price of flights.

And while low cost airlines reinvented all-inclusive fares, traditional airlines, for their part, tried to divest their offerings, in order to isolate the price of the flight from additional services. Whereas a few years ago everyone included checked baggage and seat choice in their prices, almost all traditional American and European airlines now offer prices without baggage and seat choice. This also contributes to increasing the weight of complementary services in your billing.

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