“The Best of Airline A La Carte: Turning Passenger Choice into Ancillary Revenue” by Jay Sorensen.
Airline ancillary revenue has evolved from a collection of experimental fees into a central component of the modern airline business. What began with charges for selected services has developed into a sophisticated retailing discipline encompassing baggage, seat assignments, branded fares, food and other optional products. The central idea is straightforward: Passengers should be able to choose the services they value rather than having every element of the journey bundled into a single fare.
The March 2026 report A Field Guide to the Best of Airline a la Carte issued by IdeaWorksCompany examines this evolution through data and examples from airlines around the world. The report was created following a workshop with an airline team in Europe. Participants asked for more data and best-practice examples, prompting me to draw on my files, spreadsheets and observations. I liken the result to a field guide for identifying birds: Just as a bird guide helps readers recognize species by their characteristics and behavior, this report helps airline professionals identify ancillary-revenue opportunities.
The primary lesson is that airlines should concentrate their resources on the ancillary products that matter most. Baggage, seat assignments and branded fares form the core of the opportunity. Food and other optional services can enhance the customer proposition, but they should not distract management from the products capable of generating the greatest financial impact.
Baggage: The Original Ancillary-Revenue Powerhouse
Globally, baggage remains the largest single source of ancillary revenue. It is also one of the activities most likely to appear explicitly in airline financial results. In the United States, the Department of Transportation requires airlines to disclose revenue from checked baggage. Even so, reported baggage revenue does not necessarily capture the entire economic picture. Bags can be included in branded fares, while co-branded credit cards frequently provide free checked baggage to eligible customers. Banks may reimburse airlines for baggage benefits, and such payments may not be captured in government reporting or airline financial disclosures.
The differences among airlines can be striking. The report's 2025 data shows Frontier generating $25.88 in baggage revenue per passenger, followed by Allegiant at $22.16, AirAsia X Malaysia at $19.30 and now-defunct Spirit at $17.53. JetBlue, Breeze Airways, United and American also produce substantial amounts, while several other airlines generate considerably less.
One factor stands out: Charging for overhead carry-on bags can make a significant difference. Frontier uses a particularly elaborate approach to baggage pricing. Its branded fares provide different levels of baggage inclusion, such as its lowest Basic Fare which requires separate payment for carry-on and checked bags. Customers choosing higher fares receive an overhead bag allowance.
Frontier varies checked- and carry-on-bag fees according to flight and demand rather than relying on a single systemwide price. These prices are not personalized, but the airline uses progressive pricing, with fees increasing as departure approaches. In one example cited in the report, an overhead bag began at $59 during booking and increased to $99 at the gate. The high gate price is designed in part to discourage passengers from waiting until the airport, where agents may otherwise need to check bags.
Frontier has also used employee incentives to encourage adherence to baggage policies. For 2023 domestic flights, the airline disclosed payments of $10 for each carry-on bag sold at the departure gate and $10 for each carry-on purchased digitally within 60 minutes of departure. Airport ticket-counter purchases for bags generated a $3 incentive, while domestic extra-legroom seats also carried a $3 incentive. Frontier reported paying $12,512,526 in incentives during 2023 and said the program contributed an additional $40 million during its first year in 2022.
The broader lesson is that successful ancillary revenue depends upon execution throughout the customer journey. A fee merely disclosed on a complex online table hardly contributes to consumer confidence. It must be presented effectively during booking, supported at the airport and understood by employees.
Transavia provides another useful example. After introducing fees for overhead carry-on bags in April 2024, the airline generated more than €20 million from the fees during the fourth quarter of that year. I calculated approximately €4 in revenue per passenger and estimate that, assuming an average fee of €30, roughly 13 percent of passengers purchased the service.
Vueling takes a particularly clear approach to communicating baggage choices. Its booking process promotes a fare which has customers selecting between an overhead carry-on and a checked bag. This also addresses a persistent terminology problem in the airline industry: the phrase "carry-on bag" can obscure the distinction between baggage that goes under the seat and baggage that occupies overhead-bin space. Vueling's use of "underseat" and "overhead" makes the difference more apparent.
Seat Assignments: A Major Revenue Stream
Seat assignments have become almost as important as baggage. United collected $1.3 billion from seat fees in 2023, more than the $1.2 billion it received from checked bags that year. Air Canada's low-cost Tango unit was the likely early originator of seat-assignment fees in 2001. Over time, what began with charges for spacious exit-row seats expanded to encompass much more of the cabin.
The financial results demonstrate the importance of the category. Frontier generated $7.93 per passenger in assigned-seating revenue, Spirit $7.88 and United $7.76. American generated $4.14, while Jeju Air, T'way Air and Thai AirAsia produced smaller amounts.
The prices of individual premium seats can also be substantial. The IdeaWorks report lists the most expensive extra-legroom seats during 2023–2024 at $319 for United, $299 for Spirit, $141 for Frontier and $140 for American. The high prices at United reflect its long-distance network and an aggressive pricing approach.
United provides a striking illustration: A $263 Economy Plus seat assignment on a Chicago-to-Tokyo itinerary was an additional fee, while the one-way economy fare for that trip was $1,159. American takes a somewhat different product approach, adding early boarding and complimentary beer, wine and spirits to its Economy Extra zone.
Notwithstanding the carrier’s liquidation, Spirit's presentation was another example of effective merchandising. Its seat-selection process resembled a Monopoly game board, with every seat carrying a price. Customers could therefore associate price with relative seat quality, while visual coding helped identify characteristics such as exit rows. A drawback is that the presentation was somewhat cluttered when additional upgrade messaging was included.
I must add an important warning. Airlines should avoid allowing ancillary pricing to become synonymous with greed or poor customer treatment. When an airline fails to deliver a purchased seat product, refund policies should be easy and prompt. The profit margin on most seat assignments is nearly 100 percent and airlines should therefore be particularly forgiving when something goes wrong.
Buy-on-Board: Food Is Harder Than It Looks
Food presents a different challenge. Unlike a seat assignment, food is a physical product that must be sourced, stocked, transported and served. Fresh food creates the possibility of spoilage, while stocking flights away from major hubs can be difficult. Passengers can also become instant food critics through social media.
Nevertheless, a carefully managed buy-on-board program can produce meaningful results. Lufthansa Passenger Airlines ‒ covering Austrian, Brussels, Lufthansa and SWISS ‒ reported average spending of €8.65 per food customer, although the figure fell to €2.44 when spread across all passengers. EasyJet reported £2.38 in onboard food revenue per passenger for fiscal 2024 and £0.68 in profit, representing a 28.6 percent profit margin.
EasyJet's approach illustrates the value of recognizable products. The airline brought back a popular bacon roll and identified its ham-and-cheese toastie as its top seller, with 1.3 million served on UK flights in 2025. Its menu included nine fresh or hot food items.
The report suggests a practical model for buy-on-board success: Offer four to six fresh or hot entrees and try to establish one or two as signature products. Other menu items can be shelf-stable, reducing spoilage. Meal deals that combine a drink, sandwich and chips can encourage customers to spend more. But menu complexity quickly becomes the enemy of profit.
Hot food creates additional operational problems. Low-cost airlines may have removed galley ovens, and heating food requires additional work by cabin crew. If the result is inconsistent, the airline risks delivering a product that is merely warm rather than genuinely hot and appealing. IdeaWorks’s advice is blunt: If an airline cannot reliably deliver a great hot product, it should not attempt one.
Packaging is another overlooked component. Airline-created snack boxes sometimes emphasize the carrier's brand more than the food. I suggest a simple test: Imagine the package sitting on a grocery-store shelf. Would a shopper choose it? Professional food packaging can make the product more attractive on both the menu and the onboard trolley.
Preorder: Efficiency With a Customer-Service Risk
Preordering fresh food offers a compelling operational benefit. Airlines know what passengers want and can avoid loading excessive quantities of perishable food. Customers can also receive greater choice. But passengers may hesitate to make food decisions weeks or months before a flight, making preorder less natural than an ordinary retail purchase in a physical store.
United refined its buy-on-board program on March 1, 2026, by requiring preorder for fresh economy food on qualifying flights. Instead of loading an anticipated quantity of hamburgers and cheese trays, United can therefore board meals that passengers have already selected. Passengers who do not preorder can still purchase shelf-stable snacks.
The operational challenge is reliability. Preordered food must reach the correct passenger, and digital systems must accurately communicate orders to cabin crew. Wifi failures can complicate that process. If a passenger's meal is missing, the airline needs a recovery mechanism such as a refund or bonus miles. Otherwise, cabin crew can be left to manage angry and hungry passengers without adequate support.
Focus on What Counts
The strongest conclusion by far is that airlines should resist the temptation to chase every new ancillary-revenue idea.
The same principle applies to product development. Rather than constantly asking what the newest ancillary idea might be, airlines should focus on the categories that already produce the greatest returns. Baggage, assigned seats and branded fares are clearly the three major revenue producers. Together, they can deliver 95 percent or more of an airline's ancillary-revenue potential.
Other products still have a place. Flexible booking protection, empty-middle-seat products and other optional services can generate incremental revenue and delight particular customer groups. But they should complement the fundamental work of maximizing bags, seats and branded fares.
As it has been for decades, ancillary revenue is a form of customer choice. Passengers can decide which features matter to them, while airlines can capture revenue based on the value customers place on individual services. Success depends on making those choices understandable, pricing them intelligently, and delivering what has been promised.
My recommendations are therefore straightforward: Develop effective overhead, underseat and checked-bag policies; consider charging for overhead bags when consistent with the airline's brand; make seat prices and attributes easy to understand; refund fees when purchased products are not delivered; create a few high-quality signature food items; avoid poorly executed hot meals; and build reliable recovery procedures around preorder programs.
Ultimately, the best ancillary revenue strategy is not about inventing an endless stream of new fees. It is about identifying what passengers value and executing those products exceptionally well. The airlines that do this successfully turn baggage, seats, food and fare choices into a coherent retail proposition — one that can generate substantial cashflow while giving customers greater freedom to decide what they want to buy.
You may download the original report here, including all footnote references: https://ideaworkscompany.com/a-field-guide-to-the-best-of-airline-a-la-carte-report/
Jay Sorensen
President, IdeaWorksCompany
Jay Sorensen’s research and reports have made him a leading authority on frequent flyer programs and the ancillary revenue movement. He is a regular keynote speaker at ancillary revenue and airline retail conferences and has testified to the US Congress on ancillary revenue issues. His published works are relied upon by airline executives throughout the world and include first-ever guides on the topics of ancillary revenue and loyalty marketing.
Jay has 43 years experience in product, partnership, and marketing development. As president of the IdeaWorks consulting firm, he has helped boost airline revenue, started loyalty programs and co-branded credit cards, developed products in the service sector, and helped start an airline and other travel companies. His career includes 13 years at Midwest Airlines where he was responsible for marketing, sales, customer service, product development, operations, planning, financial analysis and budgeting. Jay also leads the Kids First Fund and volunteers to restore ranger cabins in wilderness areas.