Airline Fares Drop but Extras Soar – Inside the $148 Billion Ancillary Revenue Boom

The 2025 Yearbook of Ancillary Revenue has revealed a striking transformation in global aviation. While average fares declined in 2024, ancillary revenue soared to $148 billion, breaking the previous high of $109.5 billion set in 2019.

Covering 61 airlines worldwide, the report shows that low-cost carriers (LCCs) are leading the way, with some airlines now making more money from extras such as baggage fees and seat charges than from actual ticket sales.

Global Revenue Growth Despite Falling Fares

Passenger traffic rose by 8.6% to reach 4.6 billion travelers in 2024, but airlines compensated for lower fares by boosting ancillary income streams.

• High-performing LCCs saw a 3.6% rise in ancillary revenue per passenger, even though average fares dropped 5.7%.
• Traditional airlines also benefitted, gaining 5.3% in ancillary revenue per passenger, offsetting a 6% decline in fares.
• U.S. majors such as American, Delta, United, Southwest, and Alaska reported ancillary growth of 2.4%, despite a 1.4% fall in fares.

The overall trend confirms that extras have become a lifeline for airlines, cushioning them from the volatility of fare-based income.

Top 10 Airlines by Ancillary Revenue Share

The ranking spotlights LCCs that have turned optional services into a major business model.

Top Performers in 2024 (Ancillary Revenue % of Total):

• Frontier (F9): 62.0% (+5.8 points)
• Spirit (NK): 58.7% (+2.3 points)
• Volaris (Y4): 55.3% (+6.6 points)
• Breeze (MX): 54.0% (+2.7 points)
• Allegiant (G4): 52.9% (+3.1 points)
• Wizz Air (W6): 44.6% (-0.1 points)
• Viva Aerobus (VB): 43.7% (-1.8 points)
• Volotea (V7): 40.0% (new entry)
• easyJet (U2): 38.6% (+2.5 points)
• Pegasus (PC): 33.9% (+3.6 points)

This ranking underscores how Frontier became the first airline to break the 60% threshold, showing just how far the “unbundled” fare model has gone.

Frontier and Spirit Push Ancillary Boundaries

Frontier Airlines leads the industry, with nearly two-thirds of its revenue now coming from extras rather than ticket sales. Its policies limiting free carry-on bags and applying dynamic seat pricing helped push ancillary revenue to record highs.

Spirit Airlines closely follows at 58.7%, also relying heavily on fees for baggage, seat assignments, and add-on bundles.

These strategies make fares appear low on booking platforms while generating significant income once travelers select extras.

Traditional Airlines Follow LCC Playbook

While low-cost carriers dominate, traditional full-service airlines have also embraced ancillary models. Many now offer basic economy fares, mimicking LCC practices to attract budget travelers while charging for upgrades.

The challenge, however, is avoiding brand dilution. Analysts warn that blurring the line between low-cost and full-service could erode traditional carriers’ premium identity.

Loyalty Programs as Revenue Powerhouses

Beyond baggage and seat fees, loyalty programs are becoming a major ancillary driver.

• U.S. airlines generated $28 billion in loyalty revenue, averaging $35.48 per passenger.
• Qantas stood out, with 35% of consumer credit card spending tied to its frequent flyer program.

According to Jay Sorensen, President of IdeaWorksCompany, loyalty schemes remain a hidden giant of airline profits, providing financial stability even when fare revenues fluctuate.

Notable Innovations in 2024

Several airlines introduced unique strategies that stood out in the ancillary market:

• Frontier crossed the 60% ancillary revenue share milestone, a first in the industry.
• Norse Atlantic Airways (N0) achieved over $100 per passenger annually in ancillaries, thanks to branded fare bundles.
• Pegasus and easyJet expanded flexible add-on products, boosting their revenue shares significantly.

These innovations demonstrate how airlines are continuously refining unbundled pricing models to maximize earnings.

Industry Implications and Passenger Impact

The rise of ancillary revenue signals both opportunity and risk for airlines.

• For airlines: Ancillaries provide resilience against fare wars and fuel price fluctuations.
• For passengers: The shift often means higher out-of-pocket costs if extras are needed, but it also gives travelers the ability to customize their experience.

The report notes that the industry-wide shift to a la carte pricing is reshaping expectations. What was once included—like checked bags or seat selection—is now considered an upgrade.

Bottom Line

The 2025 Ancillary Revenue Yearbook highlights a turning point for aviation economics: airlines now rely more on extras than tickets for profits.

For passengers, this trend means cheaper base fares but higher costs for convenience. For airlines, it represents a sustainable revenue model that shields them from volatile market conditions.

As Frontier, Spirit, and Volaris push ancillary revenue beyond 50%, the rest of the industry is following their lead—reshaping air travel in ways passengers cannot ignore.

FAQs – Airline Ancillary Revenue Report 2025

Q1: What is ancillary revenue in airlines?
Ancillary revenue includes income from extras like baggage fees, seat selection, priority boarding, in-flight meals, and loyalty program sales.

Q2: Which airline made the highest ancillary revenue share in 2024?
Frontier Airlines topped the list with 62% of its total revenue from ancillaries.

Q3: How much ancillary revenue did airlines generate globally in 2024?
Airlines worldwide generated $148 billion, up from $109.5 billion in 2019.

Q4: Are traditional airlines also relying on ancillary revenue?
Yes. Full-service carriers like Delta, American, and United have introduced basic economy fares and expanded ancillary options to boost revenue.

Q5: How does this trend affect passengers?
Passengers often see lower base fares but pay more for add-ons like baggage or seat upgrades, making travel costs more variable.