An airline may have other sources of income besides selling the ticket to consumers. This revenue represents an important share and already amounts to an average of 21.5% of the air transport bills of Brazilian companies.
The year 2020, as a result of the pandemic, was different from any other year so far. Total revenue from air transportation in the national Azul, Gol and Latam operations was about R$19.5 billion last year. Of this amount, R$15.3 billion has been allocated for passenger transport.
Other revenue, which includes items such as checked baggage, merchandise, mail (mail and other orders), penalties, on-board service and seat reservations, totaled R$4.2 billion, making up an average of 21.5% of revenue.
Shipping and postal services represent the largest weight for these other revenues (up to 13% of the total). Gains from baggage collection are lower (about 3% of the total), but they constitute this alternative source of revenue (see weight for each item below).
See how much each additional ingredient produces
According to the corporate financial statements, released by Anac (National Civil Aviation Agency), ancillary revenues for airlines are those that consist of the sale of food and beverages, multimedia services, seat reservations, passenger tracking, medical assistance services, and animal transportation. , among other things.
There is also an entry for values that have arisen with applicable penalties, which include fees for canceling tickets, refunds, flight rebooking, and no-shows for boarding, among others.
Find out how much each company revenue from air transport in each sector in 2020:
- Passengers – R$4.7 billion (79.5% of total revenue from air services)
- Goods and mail bag – R$747.9 million (12.6%)
- Sanctions – 219.7 million Brazilian reals (3.7%).
- Baggage – R$ 146.8 million (2.5%)
- Seat reservations – R$57.3 million (1%)
- Other Additional Income – R$43.7 million (0.7%)
- Total – R$ 5.9 billion (100%)
- Passengers – R$ 5.2 billion (86% of total revenue from air services)
- Goods and mail bag – R$316.3 million (5.2%)
- Sanctions – 252.7 million Brazilian reals (4.2%).
- Baggage – R$ 164.1 million (2.7%)
- Seat reservations – R$64 million (1%)
- Other Additional Income – R$40.8 million (0.7%)
- Other Income – R$10.6 million (0.2%)
- Total – Rls 6.1 billion (100%)
- Passengers – R$5.3 billion (71.8% of total revenue from air services)
- Goods and mail bags – R$ 822 million (11.1%)
- Other Income – R$703.5 million (9.5%)
- Sanctions – 253.3 million Brazilian reais (3.4%).
- Baggage – R$ 209.1 million (2.8%)
- Seat reservations – R$61.2 million (0.8%)
- Other Ancillary Income – R$ 46.2 million (0.6%)
- Total – 7.4 billion BRL
The freight operation is also an important source of revenue for airlines. Whether it is operated with exclusive cargo planes or with cargo dispatched in the holds of passenger aircraft, the amount injected amounts to a billion dollars annually.
In 2020, Azul Cargo, Azul’s freight division, increased its revenue by 38.4% compared to 2019, totaling R$764.1 million. In the entire Latam Group (the Brazilian operation was added to the operations of other countries), for example, only the freight operation accounted for 28% of revenue in 2020, while passenger transportation accounted for 68% of the total (other revenue was only 9%) .
Despite the sharp decline in ticket sales compared to 2019 in the Latam Group (about 70%), freight revenue increased by 13% in the same period. This is due to the increased transportation of products by air, especially medical supplies and e-commerce.
In the US, revenue from other items is 47%
According to a study conducted by consulting firm IdeaWorksCompany, in partnership with technology company CarTrawler, together during 2019 Azul and Gol earned a total of only R$ 4.92 billion with revenue other than ticket sales, which amounted to R$ 2.56 billion and R$ 2.36 billion, respectively. This represented 22.4% and 17% of each individual’s revenue, which amounted to R$11.44 billion and R$13.86 billion, respectively.
The consulting company considers additional income those that are not directly related to the sale of passenger carriage on board, and loyalty programs include, among other things, in this list.
This revenue has been gaining over the years and has become a growing source of income, as IdeaWorksCompany highlights.
In the United States, for example, Spirit and Allegiant companies have 47% and 46.5% of their sales made up of additional revenue, respectively.
Among the main items sold that bring this type of revenue from companies is the selection of seats. The option of places with a larger area is the most popular among travelers, according to the advisory.
Seat pre-selection has also become a factor of interest for airlines, with more people choosing to sit at the front to get off the plane more quickly, he says. IdeaWorks.
Azul, Gol, and Latam had not commented on the billing data until this report was published.
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