How ancillary #revenue helps low cost #airlines?

Low cost airlines’ main source of making profits has always been ancillary revenue. It is true that the low cost airlines provide cheap and economic flight tickets but for every other service which a customer opts for both in and out of the flight are charged. Ancillary revenue can in short be defined as revenue beyond the sale of tickets that are created by direct sales to passengers, or indirectly as a part of the travel experience.

The passengers consider it as a tactic of increasing the fares while the LCCs find it as a method of getting rid of fares. This trend is now slowly being followed by flagships so as to reduce their operating cost. Airlines increase their revenues without taking away the travel experience by charging extra fees for service such as checked baggage and beverages served onboard.

Low cost carriers such as easyJet and Ryanair have generated vital profits on the strength of ancillary revenues. They have continuously introduced various changes in their pricing system which ultimately helped in increasing their ancillary revenue.

Low cost airlines have to be very much cautious while introducing methods to get revenue beyond their flight tickets. This is because at times such methods can backfire by creating a negative effect on their customers and could hit one of the most intangible factors – reputation.

To know more about various techniques of increasing ancillary revenue visit Low Cost Airlines Congress 2011.