ancillary revenues

63% of airline executives think that ancillary revenues will be a major source of profits in the future. But are they getting it right with the short-term moves like charging for water and then reversing the charge? Probably not. And this was the issue I addressed in my webinar entitled “Airlines 2.0: 5 ways to unleash the potential of ancillary revenues in a downturn.” The webinar was very well received with some very interesting questions asked by the participants.

And I’m sharing the slides from that webinar here. The slides include a bonus video (see slide 14) which I couldn’t show during the webinar since it wasn’t possible to do it remotely. But I’ve integrated them here exclusively for my blog readers.

Here’s what you’ll learn from these slides:

  • Make un-bundling work to suit your customers’ lifestyles
  • Entice customers through “reverse-bundling” in the recession
  • Maximize existing revenue channels, without compromising the brand
  • Cultivate new revenue channels using Web 2.0 tools, like Facebook, Twitter and blogs
  • Increase conversion rates for ancillary channels
  • Keep the brand intact while earning more per customer

I’d love to have you feedback on the slides below and please feel free to share them with those you think would benefit from it.

Reblog this post [with Zemanta]
  • Koomaresen
    It would be interesting to determine what percentage of the the previously charged "airfare revenue" prior to unbundling of services is now classed as "ancillary revenue" and the net effect this has on the airline's total revenue.

    What would be the effect on revenue management should the majority of its passengers not opt for the "frills" when booking and flying and thereby paying the minimum for the seat as advertised? Would the airline be able to be profitable by charging its low base fare only?

    Airlines need to look at other sources (non-airline) of ancillary revenue to boost product revenue and enhance the product purchased by the passenger.
  • Agreed - yet I believe airlines are not prepared to commit to the cost involved, even though the long term gains are greater. I believe that one potential solution, certainly for the inflight experience, is to take the partnerships with the likes of Gategroup and LSG to a greater level, to see where their services can provide more passenger value, so that the airline can focus more on efficiencies on board. In other words, the airline could focus solely on the actual flight and operations, and have the airlines services company (ie. LSG) take care of the 'comforting experience' - thus the design of the service, the manifestations of the brands, etc. could be carried out at a much more competitive cost. Just a thought.......who knows this could lead to airlines distinguishing themselves based upon the 'airline services brand' which provides the experience?
  • I would add that more focus needs to be placed on the entire airline experience. I feel that sometimes airlines are are too focused upon inflight services, whereas if they were to fully map out the experience, they could find more relevant touchpoints to provide more valuable and profitable services/products for passengers. Airline brands need to understand that they cant just board passengers and get them off the plane asap, the full journey experience occurs until the passenger arrives home, to the hotel, etc. So where are the opportunities here for the airlines? Surely more partnerships at the destination is one example.

    Also, having all the costs up front - have them customize their flight prior to boarding, so that they dont have to be charged while on board - not a pleasant experience for any passenger.

    Adam - Branding & Aviation Enthusiast
  • @Adam: Great points. I'm all for a holistically great experience delivery, across all touchpoints- something you'd have realized from reading the rest of my articles. I've actually seen a couple of airlines map out the experience - like Delta - but they often falter when it comes to execution. With so many silos and so many moving parts, it's difficult to coordinate the perfect deployment as planned.

    And yeah, as I mentioned in the webinar itself, showing the costs up-front works best.
blog comments powered by Disqus

Copyright © 2010 - Simpliflying