As the air transport market in the Asia-Pacific region becomes more competitive, yields from ticket revenue have fallen and airlines are increasingly turning to ancillary revenue to supplement operating income.

However, many airline practitioners agree that many areas in this field are still untapped and more revenue can still be gained. 

Speaking on a panel at Future Travel Experience (FTE) Asia exhibition in Singapore, Jetstar Group regional manager-Asia Rohan Kapoor said that while there has been a gain in ancillary revenue in recent years, it has been tapering off to 30%-40% of total revenue. He said airlines would have to think of new ways beyond seat selection and excess baggage, and integrate themselves into travelers’ needs such as partnerships with online travel agencies (OTAs) or ride-hailing services.

Cebu Pacific Airways ancillary director Apple Ignacio said in the Philippines, where the LCC holds the largest market share, revenue from mobile applications make up only 7% of total revenue, compared to 52% on the Web. As a result, the airline decided to focus more on improving its mobile application, although she warned not to create something that travelers would only use once or twice a year.

Lion Air Group GM-marketing Gunardi Minah also said some LCCs’ web and application development is not as focused and comprehensive compared to the scale of OTA, and some work needs to be done to reap the revenue. He said cargo is one “ancillary” revenue opportunity Lion Air Group hopes to tap further, which can garner more yield than a paying passenger. 

Kapoor added that products offered by airlines are still very “static” and with artificial intelligence and data, airlines should be able to offer tailored solutions, such as bundled offers for families or frequent travelers with certain habits. However, a more robust New Distribution Capability (NDC) should be rolled out to be shown on OTA platforms as well. 

The panel agreed that, while there are no emerging new ancillary revenues, the industry can explore dynamic pricing for seats, flight day, streaming and new trends, such as Wi-Fi dongle rental for younger demographics. Similarly, inflight duty-free shopping will not go away but could be revolutionized, powered by inflight connectivity.

This concept is echoed by Inmarsat Aviation VP-marketing communications and strategy Dominic Walters. He said the relatively slow take-up rate of airlines in the region is because they are unable to see the benefits of how inflight connectivity can drive airline revenue “beyond texting.”

He gave the example of how AirAsia’s GX Aviation product enables passengers to purchase and select food through their mobile devices, reducing the need to print menus and manually take orders, which in the long run can have visible overhead savings. 

Inmarsat will launch eight new satellites by 2024, adding capacity across the globe and potentially help with costs as well as better connectivity.

Chen Chuanren, chuanren@purplelightvisuals.com