How airlines survive and thrive in the coming decade will be predicated on how they generate ancillary revenues and also how well they deliver customer service. It’s as simple as this: if you fail at tapping into a 5 trillion dollar market and fail at delighting your passengers, well, you fail. Let’s go down the tired old, tried-and-true path for a second. Airlines increase income from seat upgrades. Maybe they improve their loyalty income from credit cards. Maybe they start charging for oxygen next, or rent seat belts. Trust me, airlines are probably debating right now about whether they can get away with this strategy or not. Either way they go in this hypothetical situation, things are going to fall apart and airlines are probably going to be overtaken by the hungry competition coming from other companies entering the travel market, like Uber, or Amazon, or Google. Their service might be better, it might not, but it’ll likely be cheaper and more convenient to future passengers. So how can airlines ensure their ancillary revenue strategy reaps rewards while not affecting customer loyalty? How can airlines maintain their brand and stay relevant to the future of travel? You guessed it: commerce technology. Technology to personalize service. Technology to optimize marketing. Technology to connect travelers with meaningful experiences. And technology to make it easy to pay for it all.
Ancillary revenue from destination content
Airlines know where their passengers are going. So why don’t they offer them high demand and unique experiences at their destination? Why don’t airlines suggest a restaurant that’s near their passenger’s hotel? These are the kinds of things that can be now achieved by leveraging machine learning. By analyzing passenger data, airlines can make incredibly personalized suggestions based on their passengers’ specific geo-location, the time of day, their personal interests, whether they have children to feed or entertain, etc. So why aren’t airlines already doing this, you might ask? If they’re not, they’re probably mired in antiquated thinking, harkening back to the days when airlines were considered merely carriers - only responsible (and profitable) during the flight portion of travel. Sure they might currently be dabbling with taking a commission on hotels and car rentals, but this is only a fraction of the spending that’s actually going on in travel destinations. A travel commerce platform can enable airlines to sell travel content long before booking, during the flight, and while in destination. Along with an AI-driven suggestion engine, a digital concierge can serve up that content at exactly the moment of greatest need and desire.
Sell traditional ancillaries better
Again, selling ancillaries during the booking path is the traditional moment for airlines to drive ancillary revenue. But it’s a small window, at best. And it’s also the moment when passengers are feeling like they’re being nickel-and-dimed. It’s the moment when they don’t want to think about paying extra for VIP lounge access. They don’t care about pre-boarding. At this moment, all they care about is saving money. So why do airlines think it’s the best moment to push upgrades? I’ll tell you why: because it’s the only window they currently have to generate revenue based upon their current technology and strategy. The key here is to offer those traditional ancillaries at optimal moments in the journey, like when they’re going to want to think about lounge access or pre-boarding services to alleviate their stress “in the moment.” Why do you think cabs wander by bus stops when it’s pouring rain? Cause they know the moment that their service will look its most attractive. Cost is a secondary concern, versus comfort.
Sell along entire journey for greatest reward
If you’re only selling these during the booking path, you’re only getting a fraction of the reward. It’s like sending an offer for cab service to someone a week before they’re going to be standing at a bus stop in the rain. Imagine a world in which you knew exactly when a person will be standing at that bus stop. Or you knew when it was going to rain. Using predictive analytics can allow you to map out the conditions that will help you provide personalized, relevant, and timely service. Imagine simply an airline that knows when a person is going to be heading to the airport and in need of a cab. Guess what - airlines already have that information!
Airlines are in a great position to own the future of travel retail. They already have a sturdy customer base and all the analytics required to personalize service. The only question airlines need to answer is: when they will be ready to embrace commerce technology and take that first step?