Importance Of Airlines Revenue

Ancillary revenue is generally defined as revenue which derived from sources other than the flight ticket which customer’s purchased. It is as well named additional revenue for instance a-la-carte items such as baggage free, on board food/beverages, priority, etc.; also other third party ancillary components such as hotel, car rental, travel insurance, etc. The old saying one size fits all has since long terminated, uneven in the airline industry. Airlines which are successful in this kind of interesting additional revenue attributes promotion not only increase airline’s profitability but as well creates a retain and happy customers.

Nowadays, airlines have gradually been contingent on ancillary revenue in response to rising fuel costs, decreased

This including reducing the costs of their operation, management as well as offering a competitive fare to their customers.

Some of the most common budget saving method used is the usage on internet booking as well as tickets which are on promotion. It is also common that the lower the price of the ticket which airline can offer, the higher the opportunities for airline to increase the demand of the tickets and increasing the sales of the tickets. Vice versa, the highest the price, the fewer customers willing to purchase; in which will lower the demand of the tickets. Low cost airlines use multiple revenue management to make the most of the demand and get the most out of the profits. Airlines use segregated assessing to proposition fluctuating prices to unalike segment of travelers simultaneously. According to Myron (2002), several factors which have an effect in the change of prices are he several remaining days until departure date, the numerous numbers of booking factor, when the predicted demand is high, reasonable high price which due to come school holiday or event which most people will travel as well as time of travel which usually morning tend to be cheaper than

Several factors affected airline financial performance during the past decade. Firstly, due to the global economic recession, revenues fell 15% throughout 2009, which is significantly more than the 7% drop experienced after the 9/11 terrorist attacks and many external events, which erode passenger demand for air travel (International Air Transport Association, 2010). Moreover, the high number of competition and over loaded of passengers’ capacity problem in the industry cause in a sliding trend in normal ticket fares and results in decreasing yields (O’Connell, 2011). In addition, the price of flights are being pressed into low all the time and many airlines from different corner of the globe are seeking for methods to shield and increase their revenue