A review of ancillary services in the airline industry

Figures & data

Figure 1. Map of core airline products (non-revenue) and revenue-producing products (Source: O’Connell).

Table 1. Definition of ancillary revenue.

Categories	Definition	Activities
A la Carte Features	These are the things on the ancillary revenue menu. They are the extras that customers can add to their flight experience.	1) Selling food and drinks on board. 2) Carrying bags and extra luggage. 3) Being given seats or better seats within the same cabin. 4) Being able to make reservations over the phone. 5) Having to pay extra for credit card payments. 6) Check-in and checking first. 7) The pros of early boarding 8) Entertainment equipment on board. 9) Access to the Internet wirelessly.
Commission-Based Products	The commission-based category is primarily earned by airlines on sales of third-party products	1) Hotel accommodations. 2) Car rentals. 3) Travel insurance. 4) Duty-free and consumer products onboard aircraft.
Frequent Flier Programs	Frequent flyer miles and points are sold to program partners.	The selling of miles or points to partners in the program, such as car rental and hotel chains, co-branded credit cards, Internet shopping malls, stores, and communication services.
Advertising Sold by the Airline	This is a new area for any advertising related to passenger travel.	1) The money made from the magazine in airtime. 2) Advertisements sold on or in planes, landing docks, gate areas, and airport lounges. 3) Market goods and samples can be placed for a fee.
Fare or Product Bundle	Airlines may allocate a portion of the price associated with an economy class bundle or product bundle as ancillary revenue.	Checked baggage, early boarding, and extra legroom for seating.

Table 2. Ancillary service categorization.

Itinerary	Trip	Relationship
Baggage	Hotels	Loyalty
Seating	Rental cars	Co-branded credit card
Meals	Destination activities	Subscription clubs
Priority boarding
Lounge access

Table 3. Reviewing studies on the willingness to pay for ancillary services.

Author	Data collection	Ancillary service	Region/airlines	Antecedents/attributes	Findings
O’Connell and Warnock-Smith (2013)	Interview; Online survey via WebFlyer’s forum	Commission-based products (i.e., accommodation and car rental) and unbundled products (i.e., extra legroom and priority boarding).	Mainline carriers & LCC	None	Airport parking and checked baggage were the most popular commission-based and unbundled airline products.
Warnock-Smith et al. (2017)	Targeted online survey via the "Questionpro" website	Inflight food, beverages, entertainment, seating, priority boarding, etc.	FSC/LCC/Charter	Carrier type (FSC/LCC/Charter), length of flight (long and short haul) and journey purpose (business, leisure, VFR)	Passengers value essential products or services like food, drink, baggage, and seat assignment, and WTP for specific ancillary services varies based on carrier type, flight duration, and trip purpose.
Shaw et al. (2021)	Interview; Survey	Commission-based products (accommodation, car rental, travel insurance and destination services, among others)	Shannon Airport in Ireland	Travellers’ age, flight length (i.e., short or long-haul), and frequent flyer status.	Car rental, airport parking, and hotel sales impact WTP most, and specific offers increase the likelihood of purchasing.
Ren et al. (2022)	Online survey	Seat selection	China	Flight purpose, number of luggage carried, situation of the accompanying person, flight time, and flight duration	Passenger seat preferences fall into three categories, unaffected by personal characteristics like gender and age but influenced by flight details like purpose, duration, luggage, companions, and preferred seat.
Scotti and Dresner (2015)	Experiments	Baggage	U.S./Southwest Airlines and nine other airlines from America	Population and income at endpoint cities on a route, airfare and baggage fee, tourist route or multiple airports at origin/destination, time and airline-specific dummy variables	A system of simultaneous equations was estimated.
Chiambaretto (2021)	Online survey	Checked baggage, inflight meals, seat selection, priority boarding, and onboard Wi-Fi	–	Trip motive, age, short- and long-haul	Leisure passengers are more willing to pay for ancillary services than business travellers, and there are no apparent differences in WTP for age. Flight duration has a mixed impact on WTP for ancillary services.
Song and Lee (2020)	Online survey	Easy packaging of flights, hotels, car rentals, and tourist experiences with real-time dynamic inventory and pricing	Korean	Gender, age, annual income, occupation, purpose of travel, Frequency and destination	The most popular commission-based ancillaries for Korean travellers are airport transfers, currency exchange, and travel insurance. Female Travellers, 20-somethings, and frequent travellers are likelier to buy these on airline websites.
Hugon-Duprat and O’Connell (2015)	A simulation model	Premium economy class	Virgin Atlantic	Long-haul	The rationale for implementing a premium economy seat is justified.
Rouncivell et al. (2018)	Online survey	Seat selection	United Kingdom	Age, previously paid a seat selection fee, member of a frequent flyer program, business and non-business travel	Accepting preferred seats is negatively correlated with ticket price sensitivity but positively correlated with airline reputation and flight time convenience for non-business travel. Past seat selection product purchases strongly predict future business and non-business travel spending.
Leon and Uddin (2017)	Online survey	Position of the seat, extra legroom, priority boarding and deplaning, reserved seats, reserved overhead space, inflight meals, and entertainment	America	Age, gender, income, number of trips, trip’s purpose	Passenger preferences for purchasing ancillary services on international flights vary based on their frequency of flying and reason for travel, with age and income occasionally playing a role.
Kuo and Jou (2017)	Survey at Taoyuan International Airport and Kaohsiung International Airport	Premium economy class	China Taiwan Province	Three flight distances, short, medium, and long hauls	Different WTP for short-haul, mid-haul, and long-haul flight distances.
Mumbower et al. (2015)	Database from JetBlue’s Website	Premium coach seat	U.S./JetBlue	The amount of the seat fee, how far in advance the ticket is purchased, the number of passengers travelling together, and load factors	Customers are more likely to buy premium coach seats if no regular coach window or aisle seats are available. Those who buy tickets closer to the departure date are also less price-sensitive and willing to pay higher seat fees.
Zhou et al. (2020)	Interviews and online survey	paying extra to choose economy-class seats	China	Gender, age, marital status, with or without children, occupation	Chinese airline customers’ WTP for ECSS is influenced by intrinsic (length of trip, seat comfort and convenience) and extrinsic (payment and consumption) cues.

Note: "–" denotes that the articles don’t mention it.

Table 4. Reviewing studies on pricing for ancillary services.

Author(s)	Ancillary service	Methodology	Region/Airlines	Findings
Mumbower et al. (2015)	Premium coach seat	Database from JetBlue’s Website	U.S./JetBlue	Near-departure ticket buyers are less price-sensitive and willing to pay higher seat fees. JetBlue’s seat fees are low in many markets. Optimal pricing could boost revenues by 8% (static fees) or 10.2% (time-dependent fees). Reserving rows for premier customers could boost sales by 12.8%.
Ødegaard and Wilson (2016)	The primary ancillary service, e.g., checked baggage service	Dynamic pricing model proposition	–	A multi-period dynamic pricing model.
Scotti and Dresner (2015)	Baggage	Experimental	U.S./Southwest Airlines and nine other airlines from America	A $1 increase in baggage fees loses 0.7 passengers and lowers average fares by $0.11. Passengers drop eight times more when fares rise $1. Airlines can increase revenue and market share by substituting higher baggage fees for higher fares.
Zhao et al. (2021)	–	On-site and online survey	China	Employing a binary logistic model and using historical Chinese domestic flight data, determined optimal pricing for various passengers, resulting in a 74.4% revenue increase.
Ambrosius (2017)	Checked baggage	Empirical sales results from a low-cost carrier	–	All price treatments were estimated to be insignificant at any segment; the population bias was present; customers were unaffected by price treatments, and days-before-departure and group size strongly correlated with checked baggage purchasing probability.
Ren et al. (2022)	Seat selection	Online survey	China	This study analysed passenger choice behaviour of ancillary services through pricing analysis, surveys, and modelling. Optimal prices were determined using historical data from a Chinese domestic flight, resulting in a substantial revenue increase of 74.4% for different passenger types.
Bockelie and Belobaba (2017)	–	Experimental	America	Offers an ancillary choice model that incorporates service prices and offerings into airline itineraries and fare class choices. Due to ancillary bundling, airlines make more money from sequential passengers than simultaneous passengers.
Kolbeinsson et al. (2022)	–	Online database	European airline/Galactic Air	Improve pricing with models and algorithms. These algorithms recommend dynamic, personalised ancillary prices for context-related features for each shopping session.
Shukla et al. (2020)	–	Online database	United Kingdom	Deepair Solutions’ dynamic pricing model provides personalised pricing based on customer interactions. It optimises revenue without compromising customer privacy by finding the best market price for each customer.
Wang et al. (2021)	–	Dynamic offer generation	–	1. DOG gains the most revenue from dynamic flight pricing, even without bundles. 2. When passengers maximise utility, bundling can boost revenue and competitiveness. 3. Bundling is ineffective if passengers do not consider ancillary prices and value when choosing an airline and flight.

Note: "–" denotes that the articles don’t mention it.

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Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article or its supplementary materials.