Abstract Some airlines, especially Low Cost Carriers (LCCs), have earned significant profits from revenues derived from ancillary revenues. However, to date few have been able to derive a meaningful portion of revenues from 3rd party ancillaries. The key to increasing these revenues comes from an understanding of passenger willingness to pay for 3rd party products/services, coupled with increasing customer awareness and consequently the all-important customer conversion. This study assesses the 3rd party ancillary services that passengers are more willing to purchase, along with the potential offers that might increase their willingness to purchase specific 3rd party services. A mixed methods approach was used consisting of a passenger survey and nine expert interviews. The main findings are that car hire, airport parking, and the sale of hotel rooms had the most significant associations with customer willingness to pay. It was also found that there was a significant association between specific offers and increased willingness to purchase. The 15% discount off a future flight, and to a lesser extent, hotel price guarantees were the most significant. Expert interviewees confirmed that the future sustainability of this revenue stream for airlines is centred on mobile digital devices, customer conversion, and exploiting potential market opportunities.

    Highlights Original academic research study specifically exploring 3rd party airline ancillary revenues. Car hire, airport parking, and sale of hotel rooms had most significant associations with customer willingness to pay. Strong association between specific offers (e.g. 15% off future flight) and increased WTP for 3rd party ancillaries. Speed/extent of 3rd party revenues dependent on engagement through mobile devices, customer conversion techniques and exploitation of market opportunities.


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    Title :

    Third party ancillary revenues in the airline sector: An exploratory study


    Contributors:


    Publication date :

    2020-09-05




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English




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