Revealed: Unbundled services add $400m to UAE airline revenue

Emirates earned $117m from excess baggage fees in the 12 months until March 2018
Revealed: Unbundled services add $400m to UAE airline revenue
Flydubai generates 11.9% of its revenue, or $16.34 per passenger from a wider gamut of ancillary services including extra leg room seating and inflight entertainment.
By Shayan Shakeel
Mon 24 Sep 2018 03:01 PM

Charging for services including checked baggage and meals onboard adds more than half a billion dollar in revenues from three out of four airlines in the UAE, results from a recent report show.

Flydubai, Emirates and Air Arabia altogether add $419,954,264 (AED 1.54 billion) in ancillary revenues, show estimations made by Ideaworks, leaning on financial statements released by the carriers and research from Kuwait’s KAMCO investment company, and published in the 2018 CarTrawler Yearbook of Ancillary Revenue.

Ancillary revenues refer to the ‘unbundling’ of fare packages that were traditionally offered to passengers as part of an advertised ticket, including meals, the ability to pre-select seats, checked baggage, lounge access, etc.

Owing to a tougher economic environment for travel, full service carriers such as Emirates and Etihad have attempted to mimic results achieved at low-cost carriers like Air Arabia and Flydubai by carving out ancillary revenues from their existing revenue streams.

Emirates does not disclose ancillary revenues in its statements but revenue from just excess baggage charges in the 12 month period that ended in March 2018 brought in $117,842, 525 (AED 433 billion) – 0.5% of its total revenue of AED 92.3 billion during the year, or $2.01 per passenger flown (over 58m passengers).

Depending on the class of ticket purchased, the airline also charges for lounge access, onboard wifi, and selecting seats before boarding the aircraft.

Flydubai generates 11.9% of its revenue, or $16.34 per passenger from a wider gamut of ancillary services including extra leg room seating and inflight entertainment. In the 12 month period until 31 December 2017 it earned $178,124,556 from unbundled services.

Sharjah-based Air Arabia earned $123,987,183 from its ancillary service strategy in 2017, at a rate of 12.2% of revenue, or $14.54 per passenger.

The report did not include results from Etihad. However, the Abu Dhabi based carrier has been experimenting with a wide range of unbundled services including chauffeur drive and allowing passengers to pay for empty seats next to them on economy class flights.

Kuwait's Jazeera Airways earned $14,275,445 from its ancillary services in 2017, at a rate of 7.7% of revenue, or $10.20 per passenger.

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