Ancillary Revenue and Airline Merchandising (2026)
Ancillary revenue is the profit engine of the modern airline, and it is fundamentally a digital marketing and merchandising discipline. Globally, ancillaries hit a record US$157 billion in 2025 and now make up 15.7% of airline revenue, up from 9.1% in 2016, with the best carriers earning over US$100 per passenger. Baggage, seats, meals, Wi-Fi, upgrades, bundles and, above all, loyalty and co-branded cards are sold by presenting the right offer to the right traveler at the right moment, across the website, app, email and inflight. For Gulf carriers, merchandising ancillaries through digital marketing is where much of the profit, and much of the growth in revenue per passenger, now lives. This is the 2026 playbook for ancillary revenue and airline merchandising.
Covered here: the profit engine, the ancillary categories, merchandising, the role of digital marketing, a la carte, dynamic pricing and personalisation, loyalty and co-brand, bundling and upsell, post-booking and inflight, measurement, mistakes, and the playbook.
$157Brecord global ancillary revenue in 2025
15.7%of airline revenue, up from 9.1% in 2016
$100+ancillary per passenger at the best carriers
Loyaltyoften the single biggest ancillary component
NDCenables dynamic, personalised offers
Digital marketingmerchandises ancillaries to lift spend
A guide in the Digital Marketing for Airlines in the GCC hub. Pairs with direct booking and loyalty & CRM.
1. Ancillary: The New Profit Engine
Ancillary revenue has moved from a supplemental income line to the profit engine of the airline. Globally it rose from US$67.4 billion in 2016 to a record US$157 billion in 2025, and now represents 15.7% of total airline revenue on average, reaching far higher at ancillary-led carriers, with the best earning over US$100 per passenger. Ancillaries let airlines keep base fares low while monetising choice and comfort. Critically, this revenue is not automatic: it is earned through merchandising and digital marketing, presenting relevant, well-timed offers across the customer journey. For Gulf carriers, ancillary revenue is where a growing share of profit and revenue per passenger now sits, making its digital merchandising a strategic priority rather than an operational afterthought.
2. The Ancillary Categories
Ancillary revenue spans three broad categories, as the chart and table show. A la carte items are fees paid by passengers for optional extras, baggage, seat selection, onboard food and Wi-Fi, and for most airlines this is the largest slice. Commission-based products are third-party sales, hotels, car rentals and travel insurance, booked alongside the flight. And loyalty revenue, above all from co-branded credit cards, is often the single biggest component for major carriers, as frequent-flyer miles are sold to banks. Each category is monetised differently, but all depend on digital marketing and merchandising to surface the right offer. Understanding this mix is the starting point for any ancillary strategy, because it tells the airline where its revenue-per-passenger upside actually lies.
Source: IdeaWorksCompany, 2025.
3. Merchandising the Offer
Merchandising is the discipline of presenting the right ancillary to the right traveler at the right moment, and modern retailing standards make it far more powerful. NDC (New Distribution Capability) and offer-and-order systems let airlines move beyond static fare classes to dynamic, personalised offers, tailoring the bundle, seat, bag, meal, upgrade, to the individual and the journey. This is fundamentally a digital marketing and e-commerce capability: it requires customer data, testing, and thoughtful presentation across the website, app, email and inflight. Good merchandising lifts ancillary attach and revenue per passenger without harming the core booking; poor merchandising either annoys travelers or leaves money on the table. For Gulf carriers, sophisticated digital merchandising is the mechanism that converts the ancillary opportunity into realised revenue.
| Ancillary category | Example |
|---|---|
| A la carte | Bags, seats, meals, Wi-Fi |
| Loyalty / co-brand | Miles sold to banks |
| Commissions | Hotels, cars, insurance |
| Upgrades / bundles | Cabin & fare upsell |
| Inflight retail | Duty free, connectivity |
Ancillary categories, 2025.
4. The Role of Digital Marketing
Digital marketing is what actually sells ancillaries. Every add-on, from a checked bag to a lounge pass to a co-brand card, is surfaced and sold through digital channels: the booking funnel, the app, email marketing, retargeting, push notifications and inflight screens. Digital marketing decides which offer appears, to whom, when, and how persuasively, and measures the result on attach rate and revenue per passenger. It also powers the personalisation that makes ancillary offers relevant rather than intrusive, drawing on first-party data and CRM. Without digital marketing, ancillary revenue is left to chance; with it, the airline can systematically lift how much each traveler spends. For Gulf carriers, ancillary success is inseparable from disciplined ancillary-focused digital marketing.
An ancillary is not sold by existing in a menu. It is sold by appearing, relevant and well-timed, in front of the right traveler, which is a digital marketing job.
5. A La Carte: Bags, Seats, Meals
A la carte items are the workhorse of ancillary revenue, and for most airlines the largest slice. Baggage fees alone generate around US$20 per passenger at top performers, and seat selection, onboard food and Wi-Fi add materially more. The digital marketing task is to present these clearly and attractively at the right funnel moment, at booking, at check-in, and via reminders, without harming conversion of the core fare. Timing and relevance matter: a seat upsell lands differently the day before travel than at initial booking. Personalisation, offering the traveler what they are actually likely to want, lifts attach. For Gulf carriers, disciplined a la carte merchandising across the journey is a steady, high-volume driver of revenue per passenger.
6. Dynamic Pricing & Personalisation
The highest-performing carriers use dynamic pricing and personalisation to maximise ancillary revenue, and the gap between average and top performers is large, as the chart shows. Dynamic seat-selection pricing, using revenue-management techniques, prices each seat to demand; personalised offers, drawing on first-party data, present the ancillary each traveler is most likely to buy. This turns a static menu into a responsive, individualised retail experience. Powered by NDC and offer-and-order systems and executed through digital marketing, dynamic, personalised merchandising is what lets the best airlines earn over US$100 per passenger in ancillaries while others earn a fraction of that. For Gulf carriers, investing in dynamic pricing and personalisation is the clearest path to closing that ancillary gap.
Illustrative; top performers per IdeaWorksCompany.
| Journey moment | Merchandising channel |
|---|---|
| Booking | Website / app funnel |
| Pre-trip | Email / WhatsApp |
| Check-in | App / kiosk / web |
| Inflight | Onboard portal, pre-order |
| Post-trip | CRM re-engagement |
Whole-journey ancillary merchandising, 2026.
7. Loyalty & Co-Brand: The Big Prize
Loyalty revenue, above all from co-branded credit cards, is often the single biggest ancillary component for major carriers, and one of the most profitable. Frequent-flyer miles are sold to banks, which use them to reward cardholders, creating a multi-billion-dollar business in which airlines and banks increasingly compete over who owns the customer relationship. For digital marketing, the loyalty programme is both a revenue source and a data engine: it captures consented first-party data that powers personalisation across every other ancillary. Marketing the programme, driving enrolment, engagement, card acquisition and points-earning behaviour, is a core digital marketing task. For Gulf carriers, building and marketing a strong loyalty and co-brand proposition is among the highest-value ancillary and digital marketing opportunities available.
8. Bundling & Upsell
Bundling and upsell lift ancillary revenue by packaging value and encouraging travelers to trade up. Fare families (basic, standard, flex) and bundles (bag plus seat plus meal) simplify choice while raising basket, and cabin upgrades, sold at booking, at check-in, or via bid-for-upgrade, capture premium willingness to pay. The digital marketing craft is to present these options clearly and persuasively, personalised where possible, at the moments travelers are most receptive. Done well, bundling improves both the customer experience and revenue per passenger; done poorly, it confuses or irritates. For Gulf carriers, well-designed, digitally merchandised bundles and upsell paths are an efficient way to lift ancillary attach across a broad range of travelers and fare types.
| Digital marketing lever | Ancillary role |
|---|---|
| Personalisation | Relevant offers |
| Dynamic pricing | Price to demand |
| Email / push | Post-booking upsell |
| Loyalty marketing | Co-brand & engagement |
| NDC / offer-order | Dynamic bundles |
Ancillary digital marketing levers, 2026.
9. Post-Booking & Inflight
The ancillary opportunity does not end at booking. The post-booking window, through email marketing, the app, WhatsApp and check-in, is prime time for merchandising: seat upgrades, extra bags, lounge access and destination products, offered when the trip feels real and travelers are receptive. Inflight, onboard retail, connectivity and food are further ancillary channels, increasingly digital through onboard portals and pre-order. Each touchpoint is a digital marketing opportunity to lift revenue per passenger with relevant, well-timed offers. Coordinating merchandising across the whole journey, booking, pre-trip, check-in, inflight and post-trip, rather than only at purchase, is how the best airlines maximise ancillary revenue, and it is a discipline Gulf carriers are well placed to master.
10. Measurement: Ancillary Per Passenger
Ancillary strategy needs a retailer’s metrics. The headline figures are ancillary revenue per passenger and attach rate (the share of travelers buying each ancillary), which reveal how well the airline is merchandising. Around them sit conversion metrics, offer-level performance, and the contribution of each category, a la carte, loyalty, commissions, to revenue per passenger. Measuring at this granularity lets digital marketing optimise which offers appear, to whom and when, and reveals where the upside sits. Benchmarking against the best (over US$100 per passenger) shows the gap and the opportunity. For Gulf carriers, disciplined measurement of ancillary per passenger and attach rate is what turns merchandising from guesswork into an optimisable, accountable digital marketing engine.
| Metric | What it shows |
|---|---|
| Ancillary per passenger | Overall performance |
| Attach rate | Offer uptake |
| Category mix | Where upside sits |
| Benchmark ($100+) | Gap to best |
| Revenue per passenger | North-star |
Ancillary measurement, 2026.
11. Common Digital Marketing Mistakes
Airlines leave ancillary revenue on the table in familiar ways. Treating ancillaries as a static menu rather than a merchandised, personalised digital marketing discipline. Presenting the same offers to everyone instead of personalising with first-party data. Over-aggressive upselling that harms core-fare conversion. Merchandising only at booking and neglecting the rich post-booking, check-in and inflight windows. Under-investing in loyalty and co-brand, the biggest ancillary prize. Failing to adopt NDC and offer-and-order capability for dynamic, personalised offers. And measuring on total revenue rather than ancillary per passenger and attach rate. Each caps the revenue per passenger the airline could earn, and each is addressable through disciplined, data-driven ancillary digital marketing.
| Mistake | Fix |
|---|---|
| Static menu | Personalised merchandising |
| Only at booking | Whole-journey selling |
| Under-invest loyalty | Grow co-brand & data |
| No NDC/offer-order | Enable dynamic offers |
| Measure total revenue | Track per passenger & attach |
Common ancillary pitfalls, 2026.
12. The Ancillary Merchandising Playbook
Sequence it. Treat ancillary merchandising as a core digital marketing discipline, not an afterthought. Know the category mix, a la carte, loyalty, commissions, and where the upside sits. Merchandise across the whole journey: booking, pre-trip, check-in, inflight and post-trip. Use NDC and offer-and-order systems for dynamic, personalised offers. Personalise with first-party data and CRM so offers are relevant, not intrusive. Invest heavily in loyalty and co-brand, the biggest prize. Design clear bundles and upsell paths that add value. And measure ancillary per passenger and attach rate relentlessly, benchmarking against the best, to keep optimising the digital marketing that drives revenue per passenger.
Key Takeaways
- Ancillary is the profit engine: a record US$157B globally in 2025, 15.7% of revenue, over US$100 per passenger at the best carriers.
- Three categories: a la carte (bags, seats, meals, Wi-Fi), commissions (hotels, cars), and loyalty and co-brand, often the biggest.
- Merchandising is digital marketing: the right offer, to the right traveler, at the right moment, across web, app, email and inflight.
- Dynamic and personalised: NDC and first-party data let the best carriers earn far more per passenger than the average.
- Whole-journey selling: booking, pre-trip, check-in, inflight and post-trip are all ancillary digital marketing moments.
- Measure per passenger: ancillary per passenger and attach rate turn merchandising into an accountable, optimisable engine.
Frequently Asked Questions
What counts as airline ancillary revenue?
Ancillary revenue is all income an airline earns beyond the base fare, and it spans three broad categories. A la carte items are fees passengers pay for optional extras such as baggage, seat selection, onboard food and Wi-Fi, and for most airlines this is the largest slice. Commission-based products are third-party sales booked alongside the flight, including hotels, car rentals and travel insurance. And loyalty revenue, above all from co-branded credit cards, is often the single biggest component for major carriers, because frequent-flyer miles are sold to banks that use them to reward cardholders. Globally, ancillary revenue hit a record US$157 billion in 2025 and now represents 15.7% of airline revenue on average. Every category is monetised through merchandising and digital marketing, surfacing the right offer to the right traveler at the right moment, which is why understanding the mix is the essential starting point for any ancillary strategy and for lifting revenue per passenger.
How does merchandising lift ancillary revenue?
Merchandising is the discipline of presenting the right ancillary to the right traveler at the right moment, and it is what actually converts the ancillary opportunity into revenue. Modern retailing standards make it far more powerful: NDC (New Distribution Capability) and offer-and-order systems let airlines move beyond static fare classes to dynamic, personalised offers, tailoring the bundle, seat, bag, meal or upgrade to the individual and the journey. This is fundamentally a digital marketing and e-commerce capability, requiring customer data, testing, and thoughtful presentation across the website, app, email and inflight touchpoints. Good merchandising lifts ancillary attach rate and revenue per passenger without harming the core booking, while poor merchandising either annoys travelers with irrelevant, aggressive offers or simply leaves money on the table by not surfacing relevant ones. For Gulf carriers, sophisticated digital merchandising, personalised and well-timed, is the mechanism that turns the large ancillary opportunity into realised, measurable revenue per passenger.
Why is loyalty the biggest ancillary prize?
Because loyalty revenue, above all from co-branded credit cards, is often the single largest and most profitable ancillary component for major carriers. Frequent-flyer miles are sold to banks, which use them to reward cardholders, creating a multi-billion-dollar business, and airlines and banks increasingly compete over who owns the customer relationship through these card and points economies. For digital marketing, the loyalty programme is both a major revenue source and a data engine: it captures the consented first-party data that powers personalisation across every other ancillary and marketing effort. Marketing the programme itself, driving enrolment, engagement, co-brand card acquisition and points-earning behaviour, is therefore a core, high-value digital marketing task in its own right. For Gulf carriers, building and marketing a strong loyalty and co-brand proposition is among the highest-value ancillary and digital marketing opportunities available, because it combines a large, profitable revenue stream with the data foundation that makes all other personalised marketing and merchandising sharper.
What is dynamic pricing and personalisation in ancillaries?
They are the techniques the highest-performing carriers use to maximise ancillary revenue, and the gap between them and the average is large. Dynamic seat-selection pricing uses revenue-management techniques to price each seat according to demand, rather than charging a flat fee, while personalised offers draw on first-party data to present the specific ancillary each traveler is most likely to buy, at the moment they are most receptive. Together, these turn a static menu into a responsive, individualised retail experience. Powered by NDC and offer-and-order systems and executed through digital marketing, dynamic, personalised merchandising is what lets the best airlines earn over US$100 per passenger in ancillaries while others earn only a fraction of that. For Gulf carriers, investing in dynamic pricing and personalisation, and the data and systems behind them, is the clearest path to closing the ancillary gap and lifting revenue per passenger meaningfully across the whole passenger base.
When should airlines merchandise ancillaries?
Across the entire journey, not just at the moment of booking. The initial booking is one opportunity, but the post-booking window, through email marketing, the app, WhatsApp and check-in, is often prime time for merchandising, because the trip now feels real and travelers are receptive to seat upgrades, extra bags, lounge access and destination products. Inflight is a further set of ancillary channels, onboard retail, connectivity and food, increasingly digital through onboard portals and pre-order. Each of these touchpoints is a distinct digital marketing opportunity to lift revenue per passenger with relevant, well-timed offers, and the same ancillary can land very differently depending on when it is offered: a seat upsell often works better the day before travel than at initial booking. Coordinating merchandising across the whole journey, booking, pre-trip, check-in, inflight and post-trip, rather than only at purchase, is precisely how the best airlines maximise ancillary revenue, and it is a whole-journey digital marketing discipline Gulf carriers are well placed to master.
How is ancillary performance measured?
With a retailer’s metrics, centred on ancillary revenue per passenger and attach rate. Ancillary per passenger is the headline figure, the total ancillary value earned from each traveler, while attach rate measures the share of travelers who buy each specific ancillary, together revealing how effectively the airline is merchandising. Around them sit conversion metrics, offer-level performance, and the contribution of each category, a la carte, loyalty, commissions, to overall revenue per passenger. Measuring at this granularity lets digital marketing optimise which offers appear, to whom and when, and clearly reveals where the upside sits. Benchmarking against the best performers, who exceed US$100 per passenger in ancillaries, shows both the gap and the opportunity. For Gulf carriers, disciplined measurement of ancillary per passenger and attach rate is what turns merchandising from guesswork into an optimisable, accountable digital marketing engine, ensuring that every offer, channel and personalisation effort is judged on its contribution to revenue per passenger.
What ancillary mistakes should airlines avoid?
Airlines leave ancillary revenue on the table in familiar ways. Treating ancillaries as a static menu rather than a merchandised, personalised digital marketing discipline. Presenting the same offers to everyone instead of personalising with first-party data and CRM. Over-aggressive upselling that lifts theoretical basket but harms core-fare conversion and annoys travelers. Merchandising only at the booking moment and neglecting the rich post-booking, check-in and inflight windows where travelers are highly receptive. Under-investing in loyalty and co-brand, the single biggest ancillary prize. Failing to adopt NDC and offer-and-order capability, which are needed for dynamic, personalised offers. And measuring on total revenue rather than the sharper metrics of ancillary per passenger and attach rate. Each of these caps the revenue per passenger the airline could earn, and each is addressable through disciplined, data-driven, whole-journey ancillary digital marketing. For Gulf carriers, avoiding these mistakes is one of the most direct ways to lift profitability.
How do a la carte items like bags and seats drive revenue?
A la carte items are the workhorse of ancillary revenue and, for most airlines, the largest slice. Baggage fees alone generate around US$20 per passenger at top performers, and seat selection, onboard food and Wi-Fi add materially more on top. What makes them powerful is volume: a modest fee attached to a large share of travelers compounds into significant revenue per passenger. The digital marketing task is to present these items clearly and attractively at the right funnel moments, at booking, at check-in and via well-timed reminders, without harming conversion of the core fare. Timing and relevance are decisive: a seat upsell lands very differently the day before travel than at initial booking, and personalisation, offering each traveler what they are actually likely to want, meaningfully lifts attach rate. For Gulf carriers, disciplined a la carte merchandising across the whole journey is a steady, high-volume driver of revenue per passenger, and one of the most reliable ancillary levers available.
Conclusion
Ancillary revenue is the profit engine of the modern airline, and digital marketing is how it is earned. A record US$157 billion globally, over US$100 per passenger at the best carriers, and a mix spanning a la carte, commissions and hugely profitable loyalty and co-brand, all of it depends on merchandising the right offer to the right traveler at the right moment. The carriers that win treat ancillaries as a personalised, whole-journey digital marketing discipline, adopt dynamic pricing and offer-and-order systems, invest in loyalty, and measure ancillary per passenger and attach rate relentlessly. For Gulf carriers, mastering ancillary merchandising through digital marketing is one of the surest ways to lift revenue per passenger and profit.
Leaving ancillary revenue on the table?
I help GCC airlines lift ancillary revenue through digital marketing and merchandising: personalised, whole-journey offer presentation, dynamic pricing, loyalty and co-brand marketing, bundling and upsell, and measurement of ancillary per passenger and attach rate. Tell me your current ancillary per passenger and I will show you where the upside sits.