Why is the airline “selling window” so brief and unimaginative – i.e., being mostly limited to the booking path and onboard trolley? How can airlines extend and enhance this window, and thereby expand their revenue opportunities? And why haven’t airlines sought to be more like successful on-the-ground retailers yet?
These are questions that we’ve thought a lot about and built our merchandising platform to address (more about that here). In the meantime, here are a few ideas that can help your airline widen its selling window on the day of journey.
Unbundling vs Re-bundling
One reason why airlines drive so little ancillary revenue compared to other retailers is because airline culture is stuck in “unbundling” mode. Airlines have long allowed passengers to pay for things like baggage and meals (i.e., unbundled them from the fare), and these have become carriers’ main sources of ancillary revenue. But airlines are just starting to think in terms of “re-bundling” ancillaries into more personalized and targeted offers that lead to higher revenue and better passenger experience.
Another word for ‘re-bundling’ is simply ‘connecting.’ Airlines are at the center of a much larger travel ecosystem where the connected traveler is the common link between airlines, airports and retailers. Re-bundling traditional airline ancillaries (baggage fees, in-flight meals) simply means connecting them to a larger traveler experience which doesn’t begin with the flight or end at the airport – and which centers around the direct (i.e., mobile) channel.
Connecting Data to Serve the Connected Traveler
Before airlines can really meet the needs of the connected traveler and make a lasting ‘connection’ with them, carriers will need to get their basic data systems and passenger apps connected and in order. In many cases, passenger data is fragmented across data silos, which can result in passengers being annoyed by irrelevant offers, duplicate messaging and limited inventory, as airlines can’t connect different sources of data to make relevant offers in real time (at the airport, on the way to the airport, near the lounge).
Personalization and other retail tactics are ultimately about getting the right product to the right customer at the right time – and that means having a complete picture of their transactional and behavioral data in real-time. This is something most airlines struggle with due to the aforementioned data silos and legacy systems, but it shouldn’t be a continuing challenge in an age of open APIs and software as a service.
With airline systems connected to passenger apps and other third-party systems (via API), carriers can then connect their own ancillaries to a global travel marketplace. Passenger apps make it easier to sell traditional ancillaries (in-app seat upgrades, for example) while allowing the airline to take control of passenger experience – and ancillary revenue – across the day of journey. Instead of a 3-hour selling window on the flight itself, airlines can widen their selling window to encompass the pre- and post-flight periods, and by doing so increase sales with more relevant offers to passengers
A Wider Window Gives a Better View
With a more complete “view of customer” and the ability to target passengers more effectively through the mobile channel, airlines are becoming more effective as travel brands – and as retailers – on the day of travel. But meeting the needs of the connected traveler will be an ongoing process.
Here are 5 steps to help airlines start now, where they are, with the data they already have…
- Change the business culture and get everyone onboard with a new focus on data and personalization.
- Start connecting existing airline systems through open APIs and integrations and identify known stress points (check-in, pre-boarding) that can be solved immediately while generating revenue.
- Begin gathering data signals about the choices passengers are making when offered solutions to those stress points. For example, do they pay to ‘jump the line’ at check in? What else are they willing to pay for?
- Integrate these data signals into a CRM system as single “source of truth” for passenger experience and retail selling.
- Look to get more sophisticated insights, more data and more sophisticated personalization strategies (AI, machine learning) and use these insights across the day of journey in partnership with other airlines and retailers.
Your airline has the ability to open or close its selling window. But opening it starts by connecting passenger data on the back-end (“single source of truth”) and then connecting each passenger to personalized offers across the day of journey (through your passenger app). Your airline already has the data it needs to sell more, make more money and become better retailers, period – but can you connect the data you do have?