The global Airline Ancillary Services market is accounted to US$ 92.89 Bn in 2018 and is expected to grow at a CAGR of 18.5% during the forecast period 2019 – 2027, to account to US$ 412.86 Mn by 2027. Airlines led the business world in their development of variable pricing of airfares, known as yield management, and in expanding to revenue management. The industry still continues to lead the business world, embracing the truism that all customers are different and have different needs. With airfares falling by almost 40% over the past two decades, majority airline ancillary services market participants cite competition as the greatest challenge being faced by their respective firms. In the airline, ancillary services market established Full-Services Carriers (FSCs) face robust challenges from Low-Cost Carriers (LCCs) offering low fares and options priced separately, and all carriers confront an array of choices related to how to create offers and communicate with customers.
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A key trend which will predominantly impact the airline ancillary services market in a coming year is that the rollout of the in-flight Wi-Fi at pace is expected to push the in-flight ancillary opportunities in the airline ancillary services market. The ability to carry on with everyday life at 35,000 feet whether it’s about checking emails or streaming from Netflix. The rising implementation of in-flight Wi-Fi in the coming years is expected to become mainstream and this is further projected to open door to new opportunities for the airline ancillary services market. Carrier services providers like Lufthansa, Austrian Airlines and Eurowings are anticipated to soon provide their customers with “home-style” broadband, whereas other carrier services providers including Air France-KLM, SAS, Finnair, British Airways, Aer Lingus and Iberia are some of the companies who are soon expected to be equipped with the latest generation of connectivity equipment.
Airline ancillary services market by carrier type is segmented into full services carriers and low-cost carriers. LCCs (Low-Cost carriers) are anticipated to continue to eat into the airline ancillary services market share of Full-services Carriers. However, the value propositions offered by the LCC are increasingly converging. Several non-premium carrier services providers have had begun to provide optionally, pay-as-you-go upgraded services to their clients. This trend was particularly prominent in emerging markets where passengers were getting more sophisticated and raised their demand for a broader range of services on board. For instance, in China and Southeast Asia, LCCs have been adopting a hybrid model to attract the customers who will be comfortable paying a little extra for better services. In response, some full services carriers such as American Airlines have tugged their models to offer no-frills packages, targeting value-conscious customer segments.
Market Key Players:
- United Airlines
- American Airlines
- Southwest Airlines
- Air France/KLM
- Lufthansa AG
- Air Canada
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This post was originally published on Commerce Gazette