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Airlines eye more onboard advertising

As airline passengers grow wary, and perhaps weary, of more fees and higher ticket prices, some U.S. carriers may look to onboard advertisements as a way to raise revenue without further tapping customers' wallets and patience.
/ Source: The Associated Press

As airline passengers grow wary, and perhaps weary, of more fees and higher ticket prices, some U.S. carriers may look to onboard advertisements as a way to raise revenue without further tapping customers' wallets and patience.

Advertisements already adorn the bottoms of security bins, in-flight television screens and boarding passes — not to mention ads that have been appearing in-flight for years, such as those on napkins, beverages and magazines.

But Harlan Platt, a finance professor at Northeastern University, said that the number of onboard advertisements could soar as airlines try new ways to raise cash. As far as what kinds of ads will likely pop up on a plane's overhead bin, cabin bathroom door, or elsewhere, "the sky's the limit," said Platt.

"I really hope the pilots don't have ads on the back of their shirts, but other than that I think anything goes," he said. "It's all about taking advantage of an asset."

Some airlines outside of the U.S. have already offered much of their fleet for ad space. Dublin-based low-cost carrier Ryanair, for example, solicits ads for its overhead bins, tray tables and aircraft exterior.

Of course what is considered "fair game" for advertising is up to the airline, but Platt predicts a growing number of carriers will look to advertising as a relatively untapped method to raise cash without nickel and diming customers.

"If it creates cash for the airline in a tasteful manner, it is going to happen," Platt said. "Every one of those overhead bins could have an ad — I don't think anything is sacrosanct. The business model of being a bluenosed airline is over."

Tempe, Ariz.-based US Airways Group Inc. is probably the most assertive in soliciting onboard ads — it was the first major U.S. carrier to put ads on tray tables and is now courting advertisers for its airsick bags.

Ray Neidl, an analyst with Calyon Securities, noted that advertising on trays has been somewhat successful at US Airways, but has been "slow to spread."

"Airlines so far have been generally reluctant (with the exception of some foreign airlines) in turning their aircraft into buses, but it may come to that," he said.

Exactly how much money could be raised by these sorts of advertisements varies greatly by a carrier's fleet size and demographics, but some analysts predict revenue can easily soar into the millions of dollars for the largest airlines. US Airways estimates it raises about $20 million annually from all of its various advertising efforts.

If the ads are done in an appropriate manner, Neidl said, "it may be a long-term trend to raise additional revenues."

AirTran Airways recently said it is considering placing ads on its planes, but said that it does have some limitations on where they would be placed.

"We decided against ads on the overhead bins because we don't want to detract from the brand experience," said Tad Hutcheson, vice president of marketing and sales. "We don't want (the plane) to look like a subway."

The company is, however, mulling more of its recently launched seat-back and tray table advertising. It is also considering charging a "well-known brand" to conduct onboard product sampling, and said it is willing to sell ads on the outside of its planes.

But Hutcheson said the company has yet to find an advertiser willing to shell out the cost of painting the outside of its planes, which can run to several hundred thousand dollars.

Hutcheson predicts that ancillary revenue — the extra sales gained from fees and advertisements — will continue to grow, but the money raised from these services still will not be enough to make up for the millions eaten up by fuel.

"It won't solve the fuel issue," he said. "But every little bit helps."