Any way airline managers look at it, onboard retail is a massive opportunity looking for the right vision and execution. Nearly two years ago we suggested its total market size could rival Wal-Mart, the world's largest bricks and mortar retailer. The analysts balked then, wondering what we were smoking. Airport operators and duty free merchandisers had long recognized the potential of captive passenger traffic. Their combined retail force already generates annual retail revenues in excess of Wal-Mart's. Today, at least eight financial analysts follow GuestLogix and the market potential. Few, if any, dispute the upside for onboard retail.
Industry consultants and conference organizers have taken grasp of the GuestLogix virtual store concept in describing this market. In the past, airlines were limited by what they could physically carry onboard. GuestLogix expanded the onboard retailing notion with virtual store selling, that is, make the purchase onboard but take delivery or consume it elsewhere post arrival. This meant that onboard offers could be instantly expanded without incurring any additional weight and fuel overhead. This included duty-free merchandise selling without stowing it. Passengers would pick up their items upon arrival at the airport.
Based on our current worldwide retail platform deployments and other industry sources we estimate the airline industry is generating US $1.00 to $1.50 in onboard retail revenue per each passenger carried today. Leading low-cost carriers, particularly in Europe, are producing at least US $5.00 to $6.00 on average per passenger while some flights by network carriers in the Asia Pacific region are achieving up to US $200 per passenger. The onboard passenger purchasing range is extraordinary.
According to OAG there were 2.82 billion passenger trips in 2007, a number that is expected to remain flat at the end of 2008. Using our industry average per passenger trip purchase, the onboard retail market is worth approximately US $3.3 billion today. With suitable onboard initiatives the average purchase should grow at least five-fold on modest passenger growth over the next three years to form a market worth almost US $20 billion. Read more about GuestLogix and the onboard retail market potential here.
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