Traffic and Transportation Journal

Article

A Review of Ancillary Services Implementation in the Revenue Management Systems

Maja OZMEC-BAN, Ružica ŠKURLA BABIĆ, Andrija VIDOVIĆ, Matija BRAČIĆ

DOI:https://doi.org/10.7307/ptt.v34i4.4065

Keywords:ancillary services, willingness to pay, personalised pricing, revenue management, airline, low-cost airline

Abstract

Ancillary services in air transport represent a set of services provided to passengers to choose from, enabling them to enhance their travel experience while accumu-lating additional airline revenue. Low-cost airlines pi-oneered the practice, but the separation of ancillary services from the basic service has become an intense-ly growing trend in the air transport industry over the last decade. This practice has enabled low-cost airlines to significantly reduce the price of the basic service. To remain competitive in an era of transparency provided by search engines, traditional airlines offer ancillary ser-vices in addition to the basic service. To meet the passen-ger’s needs, a whole range of ancillary services has been created. However, existing revenue management systems do not take this ancillary revenue into account when cal-culating reservation limits. If the airline knew that an in-dividual passenger is willing to pay more for ancillary services, the system would be able to adjust the availabil-ity of the service for that passenger during the booking process. A review of research on passengers’ willingness to pay for ancillary services is presented in the paper, as well as a review on research on the personalisation of ancillary services and challenges of integrating person-alised pricing into existing revenue management systems.

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Published

07.07.2022

Issue

2022 (Vol 34), Issue 4

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