Gains in ancillary revenue have slowed considerably at United Continental Holdings, growing year over year by less than 1 percent during the second quarter on a pro-forma basis. [more]
The combined carrier previously had grown what it calls "other" revenue by more than 5 percent year over year, according to pro-forma results for the first three months this year.
The reason for the slowdown? Elite frequent flyers and holders of cobranded credit card products--both beneficiaries of waived bag fees--have grown as a percentage of the traveler population, according to executive vice president and chief marketing officer Jim Compton. "This growth in high-valued customers is positive to revenue overall, but it does impact this line," he said during a quarterly earnings call on Thursday.
As a percentage of total operating revenue, ancillary income actually fell during the quarter, representing less than 8 percent of total operating revenue, down from nearly 9 percent during the same period last year, according to pro-forma results.