Airline Pricing - Research project about incidental income with Germanwings

The CBS places great importance on practical experience. Cooperation with companies in the free market merges theory with real commercial challenges. And so once again this semester provided our prospective Bachelor of Arts students specialising in tourism with the opportunity to face a particular task within the scope of an airline management lecture: to identify attractive ancillary revenue to further increase the turnover of Germanwings - a CBS partner.

Headed by Prof. Dr. Guido Sommer, the future trainee tourism specialists studied the current situation in the area of "ancillary revenues". Such revenue includes all additional services provided by an airline which are subject to a charge such as, for example, priority boarding, seat reservation, baggage fees or meals on board. This plays a predominant role particularly in the US American market: for some airlines, this income represents as much as a third of their turnover. Worldwide, both scheduled airlines as well as charter airlines are following this lucrative trend.

The students' first task was therefore to obtain an overview in a comprehensive benchmarking approach of the situation of airlines' ancillary revenue worldwide. A total of 80 airlines were examined extensively and compared both amongst themselves as well as with Germanwings. The result shows exciting developments. For example, a significantly increasing offer of non-flight related sources of revenue such as touristic services at the travel destination. About 70% of all airlines procure car rentals for their passengers while only 18% offer the option of C02 compensation.

Parallel to the examination, a questionnaire was developed with the aim to measure the interest and the willingness of Germanwings customers to pay for potential new additional services. The questionnaire was distributed via the airlines' newsletter and enabled some 2,400 people to participate in the survey. Among other things, the intention was to find out whether the loan of an iPad for short and medium range flights for passengers is generally an attractive option. 

The benchmark analysis highlighted trends and ideas - market research delivered actual figures for service requests by current Germanwings customers. The students developed concrete suggestions for new, attractive ancillary revenue for the low-coster based on these two studies. However, for competitive reasons, these may not be mentioned here.

Competition in the air has resulted in ancillary revenue becoming a business in itself. The CBS students were granted an exciting insight into the strategic practice of one of the most successful airlines in Europe.