There was a well researched comment from an accountant on yesterday’s post regarding accounting rules around what can and cannot be called ancillary revenue, but the situation is still not totally clear. In the scheme of things, the problem is not a large one, but one of those annoying little things that one questions why it has to exist at all. Maybe some passengers would say the same thing about checked bag fees! Ryanair just released their latest results and in the accompanying press release CEO Michael O’Leary says:
“in-flight communication will be a strong source of ancillary revenue growth in future years”
There is no doubt that investors are loving the ancillary revenue story at the moment, as I hear analysts on conference calls asking questions on this topic to airline execs all the time. And who doesn’t want their stock options to be in the money. Related to the Ryanair results I was looking at the accompanying investor presentation where it uses the term “average fares (incl. bag)” dropping by 9% . I even saw the highly respected Centre for Asia Pacific Aviation felt the need to clarify this with the words “presumably baggage charges”
I think I’ll leave this topic for now and move onto something else – at least until the next CEO goes on about amazingly great ancillary revenue growth without being totally clear on exactly which sources of revenue fall into that category.