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The passenger travel industry's primary source of revenue today is ticket sales. However, non-ticket revenues from pre-flight, on-board, and post-flight sales are becoming more prominent in the day-to-day operations and profitability of the industry. Some operators, such as Ryanair, are offering free seats with traditional ticket sales being replaced by ancillary activities. Recognizing a captive audience, the on-board retail segment has the potential to be a very profitable undertaking. In the Airline sector, according to the Official Airline Guide, there were approximately 3.3 billion trips in 2006 on scheduled flights worldwide. Rail and ferry passenger travel sectors add another 7.15 billion passenger trips annually. The average global ancillary revenue, which includes on-board retail sales, per airline passenger is approximately USD $1.18 today. Based on Ryanair’s experience with on-board sales (which average about $5 per passenger trip today), the on-board retail opportunity represents tremendous untapped upside in a business category that is potentially as large as or larger than established retail environments. With the ensuing automation of passenger travel via mobile communications and the like, these estimates will become more achievable as customers will demand access to services to entertain themselves, retail being one of them.
While new on-board retailing initiatives are rapidly taking hold, GuestLogix believes that improved execution of existing on-board processes can also yield significant returns. One only has to recall a recent trip during which one ordered food and drinks. In many instances, the attendants would ask for exact change to place in a cup. The consequence, of course, is that profitability is not being maximized either through lost sales, inventory shrinkage, and/or lost cash. GuestLogix has shown that it can increase sales by 20% to 30% alone by facilitating on-board cash management in any currency, credit and debit cards, with its retail platform.
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