According to the consulting firm OAG, the most successful low-cost airlines earn nearly half of their revenue from ancillary products, such as extras purchased by passengers. Viva Aerobus, for example, has achieved revenue of 40 dollars per passenger by selling additional services like extra luggage and seat selection. Juan Carlos Zuazua, the airline's CEO, attributes this performance to the increase in unit revenues despite growth in capacity, counteracting problems caused by the P&W engine crisis.
In Mexico, low-cost airlines have generated around 2.65 billion dollars solely from additional services in the last year. These services have become increasingly relevant in their fare structure and on which they rely more. Examples of these services include subscription cards, the sale of items in a mini-boutique during flights, and ground transportation services offered by airlines such as Volaris and Viva Aerobus.
Viva Aerobus also offers multiple ground transportation services, including transfers to/from airports and shuttle networks to tourist destinations at costs higher than the flight fare. Both airlines also provide credit card services, rewards programs linked to these cards, and travel packages that include free flights in exchange for accommodation options.
OAG highlights that low-cost airlines have become experts in offering ancillary services, generating supplementary revenues per passenger that exceed the original fare. These revenues have represented up to 53% of the total revenues of airlines such as Viva Aerobus and Volaris, allowing them to balance finances and strategies in highly competitive markets. Ancillary services have become an important incentive for the finances of these airlines, as evidenced by Volaris, where they represent more than 50% of total revenues.
In summary, low-cost airlines in Mexico have been able to capitalize on ancillary services, becoming profitable business models that offer a wide range of additional services to passengers, thus generating an important source of revenue to maintain competitiveness in a demanding market.
