Commercial Aviation Weekly: Award Seats Without Heavy Tax, HK Express Acquisition, Top Ancillary Revenue Performers

Joseph Vito DeLuca
Jul 26, 2019 - 2 min read

In this edition, we're taking a look at British Airways attempt to reduce taxation on award seats, the HK Express-Cathay Pacific merger and IdeaWorks latest ancillary revenue report.

British Airways Tests Award Seats Without Hefty Taxes

One of the biggest pet peeves for travelers are those pesky taxes that need to be paid on top of those hard earned award seats. As reported by Skift, a new trial from British Airways is pushing the fees down on some award seats to only £1.

Important to note here is that this trial does not extend to the pricier premium options such as a long-haul business class flight, but it is a much welcomed step in the right direction for dissatisfied frequent fliers.

This is the latest in a string of recent changes to airline loyalty programs, with Delta, Qantas and American Airlines among those changing their strategy. As this is a space in the midst of change, it'll be crucial to keep tabs on frequent flier programs in the midst of new customer desires and the advent of new technology.

Cathay Pacific Completes HK Express Acquisition

We have seen a lot of recent consolidation, with the latest coming from Asia. According to Forbes, Cathay Pacific has completed the acquisition of low-cost carrier HK Express and is working towards integrating the airline as a wholly-owned subsidiary.

Will Horton of Forbes writes, "the industry is closely watching how Cathay will run this dual-brand full-service/low-cost airline combination and if Cathay can give benefits to HK Express without degrading the LCC’s natural efficiency and cost psyche."

As the integration moves along, a number of HK Express employees have been laid off in an effort to reduce redundancies. Given the layoffs, it'll be fascinating to see how Cathay Pacific is able and willing to continue running HK Express' LCC model.

Which Airline is the Best at Ancillaries?

In what's becoming an annual treat for commercial aviation professionals, IdeaWorks has published its latest airline ancillary revenue report.

The top 10 airlines in total ancillary revenue (in USD) is as follows:

  1. American - $7,245,000,000
  2. United - $5,802,000,000
  3. Delta - $5,570,000,000
  4. Southwest - $4,049,000,000
  5. Ryanair - $2,801,536,938
  6. Lufthansa Group - $2,628,328,912
  7. Air France/KLM - $2,579,438,796
  8. easyJet - $1,597,900,258
  9. Spirit - $1,493,108,000
  10. Air Canada - $1,452,733,488

The majority of this list is dominated by the shear size of the airline, but when looking at the top airlines in ancillary revenue percentage to total revenue, we see a different story:

  1. Viva Aerobus - 47.6%
  2. Spirit - 44.9%
  3. Frontier - 42.8%
  4. Allegiant - 41.2%
  5. Wizz Air - 41.1%
  6. Volotea - 34.8%
  7. Volaris - 32.3%
  8. Ryanair - 31.7%
  9. Jet2.com - 31.1%
  10. AirAsia Group - 29.0%

To no surprise, this list is completely dominated by LCCs. However, as a la carte pricing continues to be more widely adapted by full-service carriers, this list may look a bit different in future years.

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