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Last Visited: 8/13/2009
"Not everyone should do what they're doing," says Jay Sorensen, president of a Wisconsin consultancy that recently released a guide to the global ancillary revenue scene.
His company, IdeaWorks, estimates that airlines are generating €1.7 billion in ancillary revenue and that the figure represents just the tip of the cumulonimbus.
It's a brave new world for carriers, that, according to Sorensen and several other industry experts, will find that rising fuel costs and falling yields will be more manageable hurdles if they are flexible enough to rethink the way they package and market their product and savvy enough to implement the right technology.
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It's against logic, but it exists," says Sorensen, who worked for Midwest Airlines before starting IdeaWorks.
And the transition will be eased by two factors: Suppliers are responding to the demand for new, nimble technology and passengers are beginning to understand the realities of 21st century air travel.
Last summer, IdeaWorks surveyed airline executives around the globe and found that the number of assets still provided free to passengers is significant.
Free online booking was offered by 95% of respondents, the first piece of checked baggage was gratis with 92% and assigned seating was free on 87%.
It all represents unrealized revenue.
Sorensen tells a story of a United Airlines flight he took from Chicago O'Hare to Honolulu before which the gate agent reminded passengers that they might want to purchase food in the terminal prior to boarding.
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They are realizing slowly that 'we can do this too'," Sorensen says.
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"What Air Canada has done is frankly amazing," Sorensen says.
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"They are creating a unique selling proposition for their own website," Sorensen says.