A Comparative Study on the Low-cost and Full-service Airlines Auxiliary Revenue Models: A Case Study of Spring Airlines and Air China

Abstract

Against the backdrop of intensified competition and rising operational costs (e.g., jet fuel fluctuations, airport landing fee hikes) in the global aviation industry, the traditional ticketdependent profit model has become unsustainable for airlines. Ancillary revenue, a low-marginalcost core non-ticket stream, drives global airlines’ profit growth, with logistics-related services (e.g., baggage check-in, door-to-door delivery) contributing over 40% of global ancillary revenue. For China’s aviation market, the 14th Five-Year Plan for Civil Aviation Development mandates transformation into "comprehensive service providers", yet existing studies lack systematic comparisons of ancillary revenue models between low-cost and full-service airlines, especially on logistics-related services, resulting in insufficient targeted support for industry transformation.

Spring Airlines (low-cost benchmark) and Air China (full-service leader) were studied to deconstruct core differences in their ancillary revenue models during 2020–2024 (post-pandemic recovery period), focusing on strategic positioning, product innovation, channel strategy, and profitability impact, with logistics-related services as the core carrier. Based on revenue diversification and business model innovation theories, case comparison, quantitative (ratio analysis, binary linear regression) and qualitative (content coding) analyses, and literature review were employed. Data were sourced from the two airlines’ annual reports, authoritative industry reports, and core air logistics literature.

Findings indicated Spring Airlines positioned logistics-related services as "profit supplementation core", with a standardized low-cost product system and 85% of logistics revenue from direct online channels. Air China regarded them as a "high-end differentiation tool", with a customized integrated service matrix and 43.2% of logistics revenue from corporate clients and frequent flyers. In 2024, logistics-related revenue accounted for 66% of Spring Airlines’ total ancillary revenue, with each 1% increase boosting net profit margin by 0.18% (R²=0.8<0.01). Air China’s logistics revenue reached 1.02 billion yuan, with limited profitability contribution but core value in enhancing high-end brand loyalty (85% corporate client retention). Differentiated paths were proposed: lowcost airlines to enhance online channel efficiency and bundle logistics-tourism products; fullservice airlines to strengthen logistics enterprise collaboration and embed logistics benefits into frequent flyer programs. The outcomes provide guidance for Chinese airlines to reduce ticket revenue reliance, advance green transformation, and build a "travel service ecosystem".