Where will the next growth in airline ancillary revenue come from?

Yesterday, Ryanair announced record profits, including a stellar 54% rise in ancillary revenues.

For airlines looking where the next growth in ancillaries will come from, I believe they should look at their departure day contact strategy. By creating a mobile dialogue on departure day, airlines can offer and fulfil ancillary services without breaking the low cost model.

I see 3 factors emerging that will enable airlines to build a meaningful departure day dialogue with their passengers:

1) Widely available, easy to use mobile web-access
The iPhone has shown that mobile web access can be intuitive and effective. People tend to change handsets every 12-18 months, so as other manufacturers follow Apple and improve their mobile browsing experience, we should see a critical mass of web-mobile users start to emerge.

2) Airline industry drive to self-service
IATA recently announced an industry standard for web check-in. I expect to see airlines develop mobile portals, so people who choose to check-in through this channel will also be able to purchase tactical upgrades and last-minute ancillary services (e.g. "Forgotten to purchase travel insurance? Don't worry, there's still time. Check out these great rates."), and see their flight status, or maybe check out the weather at their destination.

3) More GPS enabled mobile handsets
As more mobile handsets include GPS, airlines can use location information, with the passenger's permission, to offer relevant assistance (e.g. if a passenger is running late an airline affiliate could offer valet parking or security fast-track, or if a passenger has arrived early another affiliate could offer lounge access).

[UPDATE] If it takes off, it looks like Google's new Open Handset Alliance and Android development platform will improve the mobile web-browsing experience (factor #1) and according to Mobivity may be the answer to location based services (factor #3).

Summary
In the next 12-18 months, airlines will be able to use the mobile-web to connect with increasing numbers of passengers on their departure day to grow ancillary revenues.

However, you don't need to wait to take advantage of the mobile channel. A number of forward thinking airlines are already using SMS, today's mass market mobile technology, to generate ancillary revenues by providing passengers with information, assistance, and special offers.