Spirit reaches for higher ancillary revenue

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Spirit Airlines aims to increase average non-ticket revenue to $60 per passenger, up from $54.75 in the first quarter of 2013, the airline says.

Spirit's chief marketing officer Barry Biffle, speaking during a shareholders call on 20 May, did not provide a timeframe, but says $60 is the Miramar, Florida-based ultra-low-cost carrier's next logical ancillary revenue goal.

Biffle conceded that squeezing more ancillary revenue out of passengers will be a challenge, noting that the airline hit its current $54.75 peak thanks partly to changes to checked and carry-on baggage fees.

The carrier now charges passengers more for checked and carry on baggage if customers purchase the service at the airport rather than online. Fees for carry-on luggage are highest - $100 - when customers pay at the gate.

"That is driving people to deliver things to us that generate more money," Biffle says. "But for the customer, it saves them more money if they behave in ways that saves us money."

The airline is also expanding the types of products that it can sell through other channels, Biffle says.

One of the newest drivers of ancillary revenue is the company's new call centre service provider, Plantation, Florida-based C3|CustomerContactChannels.

Biffle says C3 is now selling vacation packages, hotel rooms and car rentals.

The programme is in early stages of development, but "we're starting to get traction with it", Biffle says.

The airline is also redesigning its travel agency portal to allow travel agents to sell vacation packages, Biffle says.

In addition, Spirit expects to soon sell "bundled products" through global distribution systems, or GDSs.

Bundled products might include air tickets and checked baggage fees, Biffle says. Currently, only Spirit's flights can be booked on GDSs.