Sales of frills taking off for budget airlines

They make up more than $1 for every $5 collected, and ratio is growing

From charging travellers for preferred seats and checked baggage, to food and drinks and even blankets, airlines are making good money by selling frills.

These are items and services aside from flight tickets.

For budget carriers that typically offer low fares and charge for extras, ancillary revenue - as such earnings are called - account for more than $1 out of every $5 collected.

Both the amount and the ratio are increasing, said Jetstar, Tiger Airways and AirAsia.

Last year, Jetstar collected A$30.60 (S$36) per passenger, which was a 27 per cent jump from the year before.

AirAsia earns about RM40 (S$16) per passenger, which makes up 18 per cent of total revenue.

The aim is to increase this to 26 per cent this year, said the carrier's Singapore boss Logan Velaitham.

A spokesman for Tiger Airways said ancillary revenue has been growing with new products introduced.

Earlier this year, for example, the airline introduced Tiger Connect, which allows customers with connecting flights on partner carriers like Scoot to make the transfer without the need to clear immigration and check in again.

The service costs $16 for online bookings.

IdeaWorks, a United States- based research company which tracks the industry's ancillary revenue, reported this week that global airlines are earning more from selling frills.

Last year, total takings hit an estimated US$27.1 billion (S$34 billion), more than double the amount in 2009.

The firm surveyed more than 50 carriers including Qantas, Delta, AirAsia and Jetstar, and extrapolated the industry's figures from there.

In its report, IdeaWorks noted that while ancillary revenue was once largely limited to low-fare airlines, it is now a priority for many full-service carriers as well.

IdeaWorks president Jay Sorensen said: "Statistics help tell the ancillary revenue story, and every year key numbers are getting larger... Whatever the source, it is revenue desperately needed by airlines during troubled economic times."

Industry observers noted, however, that unlike American and European full-service carriers, Asian premium carriers are more reluctant to rush in, possibly for fear of being seen as going down the same path as budget carriers.

Five years ago, when Singapore Airlines started charging a one-way US$50 fee for a guaranteed "preferred seat" in economy class which offers more uncluttered legroom, the carrier sold it as a customer service, not a revenue-generating move.

Apart from this, the airline earns ancillary revenue mainly from on-board retail and excess baggage charges.

Spokesman Nicholas Ionides said takings are "modest" and "not a major contributor" to total turnover.

Private tutor Anna Lin, 32, said: "I like the idea of budget carriers unbundling services so you pay for what you want.

"For a short flight, I just want a seat. No need for food or entertainment."

Join ST's Telegram channel and get the latest breaking news delivered to you.