 |
|
Turbulent economic times are once again forcing network carriers to rethink their full-service models. Let’s face it; it’s getting more difficult to operate at full-fare as air travel is no longer a novelty or a luxury undertaking. This, in part, explains why the entire industry has yielded so little in total return to stakeholders since the inception of commercial flight. Hotels, often the destination upon flight arrival, have not succumbed to the same business practices, however. Instead, they frequently focus on the ancillaries, even bottled water by the bedside. Rail operators, another participant in the travel ecosystem, have always relied on captured passengers paying extra. Why? Because consumers are willing to pay for convenience. Those in the travel supply chain know that quality with convenience can often breed loyalty.
This paper highlights innovation that is now taking shape among airlines and other travel operators with respect to consumer-driven a-la-Carte retail initiatives. It also discusses how to harness the various forces to proactively support innovative onboard retail model launches. What was once considered a potential hurdle to attracting customers is now being steadily accepted as pay for what you use convenience by the traveling consumer. It’s even positioned as the new ‘green’ thing to do in some markets. This trend is leading to increased profits, reduced waste, and reduced costs for operators.
Since inception, carriers have bundled the travel-related services as part of one fare. With fluctuations in fixed operating costs represented by fuel, labor, and landing fees, operators have had to steer steadily to ancillary revenue generation to sustain any semblance of profitability. While use of fuel price hedging, outsourcing of food services and duty-free merchandising, and bartering empty seats for extra cash have had some impact on containing costs and downloading economic risk, the reality is the supply chain is being forced to re-invent itself with even more commoditization developing. The trend to onboard retail has the potential to return all the participants in the passenger experience to a more profitable footing while simultaneously providing options the consumer has never before experienced.
|
|
|
|
