Abstract
This paper examines the performance of the two core classifications of airline ancillary revenues, which are unbundled products and commission based income. It also investigates the willingness of passengers to pay (WTP) for these services together with what type of ancillary items are acceptable at a particular price point. The study found that passengers value a narrow range of perceived ‘necessity’ products and services such as food and drink, checked baggage and seat assignment as opposed to perceived ‘optional’ unbundled or commission based products/services. It also found significant differences in WTP for specific ancillary services based on carrier type (FSC/LCC/Charter), length of flight (long and short haul) and journey purpose (business, leisure, VFR).
•A narrow range of unbundled products are shown to be the most commonly purchased ancillaries for airlines.•There are statistically significant differences in willingness to pay for different ancillary products between long and short haul passengers, by journey purpose and length of haul.•Airlines can use the study’s disaggregated WTP results to determine which ancillary products to focus on.