Yahoo Finance Qantas, Virgin Australia among world’s best at getting you to pay extra
Between selecting the flight and receiving your ticket, there can be dozens of choices: do you want a window seat? Would you like an extra blanket? Priority boarding? Travel insurance? Airport transfer?
And while these choices are often associated with low-cost airlines, full-service airlines Qantas and Virgin Australia are among the best in the world when it comes to getting more bang for their buck per customer.
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However, if that’s a surprise, it’s because rather than customers paying for the extras, banks and other companies with rewards programs are paying Qantas to reward customers’ frequent flyer points, the analysis from The Idea Works Company found.
Qantas makes US$41.15 (AU$59.56) in ancillary revenue per customer, up from $15.83 per customer in 2008, while Virgin Australia makes an extra $38.74 per customer.
Figures for Virgin Australia’s ancillary revenue in 2008 weren’t available.
This means that Qantas made $1.14 billion in revenue from frequent flyer programs, while Virgin Australia makes $275 million.
According to Qantas, 35 per cent of credit card expenditure in Australia is on Qantas co-branded cards.
“The exponential growth of ancillary revenue among carriers is yet another indication that the
airline experience now goes far beyond the flight itself,” said Aileen McCormack, Chief Commercial Officer at CarTrawler.
“Customers want choice for every part of their journey and need a one-stop-shop to get them from door to door, not just from airport to airport.”
Which airline gets the most out of passengers?
US budget airline Spirit makes the most out of its customers, raking in an average $50.94 per customer.
Fellow budget airline, Allegiant, ranked second followed by Frontier.
British budget airline Jet2.com was next, followed by Qantas, United and American Airlines, Virgin Australia, AirAsia and Hawaiian.
However, warns report author Jay Sorensen, too many extras can be a bad thing.
He pointed to American Airlines’ “Are you sure” pop-up box which warns about the limitations of buying a cheaper product, like having to pay to check bags and being forced to board in the last group.
“Too much eagerness to build ancillary revenue can be a bad thing. If an airline feels compelled to make this effort to warn a customer against buying a product . . . then they should really reexamine what their brand means to the customer.
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