How an intelligent seating system can bring ancillary revenues, and is great for the airline brand

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Ancillary revenues – money an airline makes from things other than the asirfare – have always proven to be attractive profit centers for airlines. But very often, they tend to be random, with airline executives making their decisions based on how much money the source brings to the airline, rather than anything else. Moreover, ancillary revenue streams are often garnered from outside the cabin, like having special offers on the website or charging a fee for baggage check in.

But as I mentioned in my white paper on airline branding, Brand eXperience is one of the most important factors affecting the brand perception and the time spent in the plane forms the most important part of the eXperience. According to recent research, the most important factor determining the in-flight experience is not service or in-flight entertainment, but the person you’re sitting beside! 80% of passengers feel their seat neighbor’s bahaviour influences their overall flight satisfaction. And there lies the opportunity.

Bring in Satisfly – to optimize your seating in the plane

A friend of mine, Sergio Mello, has started up a company called SATISFLY, which solves the above-mentioned problem. They help passengers choose the kind of people they want to sit next to on a flight. Basically, they combine the best of social networking (Web 2.0) tools and online seat selection to help facilitate this. Passengers on an airline that’s powered by Satisfly will be able to choose one of these “zones” to sit in: social networking, business networking, business alone and relax alone.

Though the basic reason for using Satisfly is because airlines do not want passengers to feel uncomfortable due to their neighbours. But I feel the big advantage for airlines using Satisfly will be ancillary revenues.

Show me the money!

The first and most obvious way airlines can make money is by charging customers a fee for using this tool, which will only enhance their travel experience. Hence, it’s a value-added service, being offered at a price. Low cost carriers may prefer this option.

Something else that can be done is that airlines can “push” out higher fares where passengers can fly with their friends or a business prospect. So if I’ve bought a ticket on the 5pm flight but my business prospect is flying on the 6pm flight, I might be willing to pay another $50 for flying with him. This is demand stimulation at its best.

But the real value of the intelligent seating system is in gaining insight into the customer mindset. When passengers use this system, airlines learn valuable information about their clients. This can then be used to create personalized offers in the future and build greater loyalty by tying it into the frequent-flier program.

Enhancing the Brand eXperience and adding an X-Factor

Not only does offering a value added service through the intelligent seating system enhance the brand experience dramatically, it also adds an X-Factor to the brand that cannot be duplicated easily. And in the long term, this becomes a distinct competitive advantage for the airine.

In in times like these, I think airlines can do with one or two feathers in the hat. And SATISFLY is an easy way to do that.

What do you think? Will airlines invest in a system like SATISFLY in this recession, even if it means greater potential revenues in the long term? Will you be excited about using an intelligent seating system on an airline? Let’s discuss.

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Shashank Nigam

CEO at SimpliFlying

Shashank Nigam is the CEO of SimpliFlying and a globally sought-after consultant, speaker and thought-leader on airline branding and customer engagement strategy. He is also the youngest winner of the Global Brand Leadership Award and has addressed senior aviation executives globally, from Chile to Canada and from Sydney to San Francisco.

Shashank's perspectives have found their way into major media outlets, including CNN Travel, CNBC, MSNBC, Bloomberg UTV, Mashable and in leading publications like Airline Business, ATW, Aviation Week, and others.

Shashank studied Information Systems Management and Business Management at Singapore Management University and Carnegie Mellon University. Hailing from India, he splits his time between Singapore and Vancouver, among other cities.

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Patrick Murphy

I really doubt if this will contribute to extra revenues. The primary sources of ancillary revenues are derived from sales of travel add-ons on websites pre-travel, charges for services traditionally offered for free in bundled fares, advertising, loyalty programmes and on board sales. On board sales generate least revenue.
However, the idea of being able to choose with whom you sit beside will appeal to some and passengers may be willing to pay for that opportunity.
Patrick
Gary Wilson

I can’t see how a system can tell me what type of character I am sitting next to. I think there would be too many variables to take into account and I, as a user of this system, would certainly not be willing to answer any questions (and pay for that privelage) about myself that is going to be stored on some database somewhere for others to scrutinise. Can’t see how it will work…

Secondary to the above, as an aorline executive as well as a passenger it concerns me that in order to “maximise revenue in this financial crises” people are turning to “innovative” ways to get more funds from the passenger. We need to become more creative in our thinking and to adopt other ways and means of “maintaining presence” than looking at fancy ways to raise revenue… cost reduction is one such thing we can look at to help the passenger… that in my book will go much further in keeping my brand in the customers eyes than adding additional costs….
http://www.dohop.com Jon Thorvaldsson

This is a great idea and I think it can be taken even further, by e.g. analyzing customer’s interests, education, occupation etc. and at check-in offering the customer to sit right next to a person with a similar profile. Look forward to seeing how this progresses.
David L. Lamb, ITC

It is my belief that this approach requires far more information from the passenger than the passenger is willing to give. If an airline is going to make the ancillary revenue piece a successful part of the brand, the concept of ancillary revenue needs to be integrated into the pricing and revenue management and frequent traveler program for the airline.
Tom Gilhuley

Very interesting idea. I think people would be willing to pay a fee for such a service if airlines would cut back on more of their smaller fees such as for baggage, pillows/blankets, food, etc. This would be a good revenue driver if they can ditch those other small fees and go for a slightly larger fee to truly increase the chance of passengers having a more comfortable and/or productive flight.

I’d be very interested in seeing the results if they test market this system with an airline.

Backed by a strong promotional campaign focused on the increased passenger benefits of using this service, and separate targeted campaigns to each of the four sectors of travelers you mentioned in the article … I could see this sort of thing really have positive results for both passengers and the airlines.

Great blog post.
Steven Berger

I concur. Ideally, the airline would just take seating preferences. The seats would have to be assigned early enough to accommodate connecting passengers. The key is to allow your high fare and preferred travelers to change flights and still get good seats. It also gives the airline a better opportunity to keep families together. Steve Berger, Captain, USAirways
Jon Thorvaldsson

This is a great idea and I think it can be taken even further, by e.g. analyzing customer’s interests, education, occupation etc. and at check-in offering the customer to sit right next to a person with a similar profile.

Look forward to seeing how this progresses.

Jon Thorvaldsson @ http://www.dohop.com
Martino Matijevic

Shashank, are you entering Ryanair’s competition?
Gary Wilson

I read your paper on your web site and I can’t see how a system can tell me what type of character I am sitting next to. I think there would be too many variables to take into account and I, as a user of this system, would certainly not be willing to answer any questions (and pay for that privelage) about myself that is going to be stored on some database somewhere for others to scrutinise. Can’t see how it will work…
Secondary to the above, as an airline executive as well as a passenger, it concerns me that in order to “maximise revenue in this financial crises” people are turning to “innovative” ways to get more funds from the passenger. We need to become more creative in our thinking and to adopt other ways and means of “maintaining presence” than looking at fancy ways to raise revenue… cost reduction is one such thing we can look at to help the passenger… that in my book will go much further in keeping my brand in the customers eyes than adding additional costs….
http://www.ultraconsultants.net Ahmed Sultan, ITC

Definitely, I am not interested to be seated beside a mother traveling with her infant irrespective of the purpose of my trip (business or leisure).

Matching the passengers together is a good idea. Beyond the obvious criteria of grouping similar passengers together, is there a chance to seat single females beside non-married family-oriented males? The result might be happy passengers for both their flying experience as well as their success for building a family. Who knows? The marriage might also create another congenital loyal generation.

Generally, there is a potential for a system like Satisfly. Incorporating Satisfly could be one step more for those airlines which are keen about improving the flying experience of their passengers onboard. Thus, considering Satisfly is a long term investment and makes a lot of sense to be considered now as a way of keeping the existing customers. Of course, those airlines will not be using the system to generate ancillary revenue.

The issue may be different for low-cost carriers. Their passengers are paying for necessary services only: luggage, food, drinks, and eventually for using the toilet. They do not care that much about their flying neighbors who are sitting around them. Consequently, I can say that Satisfly has limited potential in LCC model especially during the current economic conditions.
Daniele

it’s an old idea….

http://www.airtroductions.com/
http://www.satisfly.com Sergio Mello

Gary Wilson

I understand that you are a savvy web user and conscious about your
data privacy.
However, by studying the Web 2.0 dynamics, we notice that a trend is clearly dominant: people share and broadcast their data to increase the level of interaction and online experience.
Leveraging this trend, SATISFLY pays back those passengers that tell us who they are by assigning the most compatible seat neighbour.

Clearly our positioning engine takes into account many variables coming from various sources, but let’s keep it simple and see an average case: two passengers that speak the same language, belong to
the same generation, work in the same industry and share common hobbies aren’t more likely to enjoy the flight experience rather than a randomly assigned couple of neighbours?
You will soon be able to try the service on our launch customer Hawaiian Airlines.

Regarding your second concern, I agree that in these tough times there is a stringent need to deliver the highest value at the lowest cost. That is why we need innovation.
SATISFLY, with it’s Intelligent Seating and Web 2.0 engagement, is a component of an airline’s value proposition and exactly like onboard meals, available checked-in luggage and ticket flexibility concurs to
foster your brand.
According to each airline’s strategy, those services could be either bundled to the fare or priced separately.
http://www.satisfly.com Sergio Mello

Jon Thorvaldsson, thank you for your support! You will see progresses soon and YES, the more passengers tell us, the most compatible seat neighbour they will have onboard.

Ahmed Sultan, Stay tuned on our website (www.satisfly.com) and you will see our solution onboard LCC!
Jeff Tomei

I am all about Social Networking and Web 2.0 applications but the real test is for someone to build a Bluenity type business that goes well beyond the AF-KLM portal. You need one that connects with other social networking sites like LinkedIn-Twitter-Facebook etc. It also needs to be regional in scope, multi lingual and versatile. Bluenity is none of these things.
http://simpliflying.com Shashank Nigam

@Jeff: I share your thoughts about Bluenity. For a social media initiative to really take off, it’s got to be applicable for many airlines and be much better integrated with the flight ticketing systems. Dopplr and TripIt are good examples of what’s working in terms of travel Web 2.0, but again, they don’t connect with airlines’ legacy systems.
Michael Malleret

Once you have powerfull revenue mangement tools taht enable a detailes segmentation of your clients and therefore divides your aircraft in gourps of clients with similar travel patterns (at least in as many groups as physical classes within the aircraft)…it becomes indeed quite complex to go further.
Looking ahead to this complex issue one approach is to launch a web2.0 applications where those who care about their neighbours have the opportunity to know who is going to travel on their same flight. AIR FRANCE KLM’s dedicated Bluenity web does just that and it’s free as an added service to AIR FRANCE KLM’s customers … http://www.bluenity.com
http://simpliflying.com Shashank Nigam

@Michael: You bring up a great point about Bluenity. It’s a good initiative by AF-KLM for their frequent fliers. But I’m keen to know how successful this has been, in terms of people actually using the site, and getting in touch with each other. Would you have an idea?
Vinay Rajan

I totally agree with Steven, But see a technical implementation problem for large airlines. The only solution is to band the seats like the prices in revenue mangement system so that if you buy a seat for a price u get in the seat even if you change the flight. But again this has another problem of varing flight types.
About the neighbor’s behaviour influences, Its quite hard to track this unless the person is a FFP member, where in the airlines could seat people of the same business or mangement level together. But its a long shot, as some passengers would like to sleep at sometime or talk at the other.
The possible solution I would say is to rearrange the seating on board dunno how but this could be a good way to seat people who know each other near by.
Gary Wilson

In order for one to be able to choose your next door neighbour is not going to be easy. The information required is so diverse and would have to be captured at reservation time. As it is, airlines are trying to keep the reservation process as short as possible and to get people to put in what they like and dislike is just going to put people off. You are asking people to input basically very personal information. I read the topic as being a problem with person;s habits that can be annoying. How do you get info on people’s habits? I sat in business class from JFK to AMS and there was a fellow sitting over the aisle that had the most annoying sniffing habit.. how would the system handle that? The other chap would certainly not input that he has a sniffing problem… In my opinion it will not work simply because the old maxim of “Rubbish in means rubbish out” will apply and people will not oput in true information about themselves voluntarily and to ask them is going to cause a lot of ill feelings.
Managing seating preferances in genral is another keetle of fish and is much easier. A business man would normally want to be as near the front as possible, on an aisle and more than likely would want an empty seat next to him / her if possible. The only people that would want to choose to sit next to another passenger is if they know that passenger (names on a fklight may not be made public so cannot choose), is a decison maker and they can try and peddle something to them. Putting them in the same category is a no-no…
Anyway, thats my 5 cents worth…
Paul Egan

Customer satisfaction = results – expectations.

Just because someone pays extra to sit in a business networking section does not mean they will avoid the whisky smelling neighbour on the Vienna-Tokyo route.

Satisfly is an interesting idea to be sure, but care must be taken because it has the potential to raise customer expectations where results are difficult to control.
Alessandra Martina

Hi. I think so too, especially when it comes to long-haul: I still remember as dreadful my whiskey-smelling seat neighbor on a Vienna-Tokyo. It’s very difficult I guess to create an intelligent seating system that is not discriminating at the same time. Definitely I have stop flying with an airline that denied me to seat next to my partner, after I had already chose the seats on-line and that I had booked that flight, even if more expensive than others, only because I could choose my neighbor!
Daintry Springer

This looks like a great service. Thanks for sharing.
Dietmar Kirchner

Yes, if you auction the empty seats before departure. As these are mostly middle seats, you can sell them actually twice.
Javier Creus

maybe the most intelligent would be to find a way to seat everyone by itself -alone- so they have no influence at all from anyone else

that would be a radical new offer !

for many, better than first class.

what if what you care the most is not “seat space” but “personal space”?
Arshad Affandi

Yes, intelligent seating system definately helps retain customers.
An unaccompanied minor travelling alone always feels comfortable to be seated next female passenger.
No one would like to be seated near to escorted criminals or medical patients whose appearance is not appropriate.
A simple procedure followed by all airlines across the network is scanning the filghts and preseating the indentifiable passengers such as families in groups, individual females, families with children seated where there is not much distrubance to other passengers.
Commercially Important passengers or diplimats would either like to be seated alone or a person prefrably next to someone from the same feild.
Doug Blakely

Doubt it. It may attract some interest up front but eventualy die. This is based on the premise that what happens when all the “desirables” to sit by are gone. Also, flying is really about being comfortable, (leg room and seat pitch) for a fare market price. What happens with the sick ones that cough/sneeze constantly and you’ve paid for that “some” special person to sit next to you? If the sick/coughing pax is right behind you (in most tightly cramped modern day seating configurations) then you’ll feel ripped off. Want to be comforatble, fly private and find a way to pay for it. You’ll never fly commercial again.
Lee Levy

I think it sounds like an interesting idea and what better time than a recession to improve our in-flight experience? I would be willing to pay a marginal fee to increase the likelihood of in-flight satisfaction by way of stimulating conversation that could potentially lead to new business contacts or even just to know that the guy sitting next me will respect my attempts at resting or catching up on a project and not wishing to be disturbed.

With the rise in social media I can see this taking off in the future. Looking forward to seeing how it progresses. Sign me up!
http://www.ultraconsultants.net Ahmed Sultan, ITC

Considering my comment # 10 above and the recent news about the plan of Air New Zealand to start matchmaking flights (http://www.thematchmakingflight.com/), I would like to ask whether I am eligible for a compensation for using my idea.
Email: management@ultraconsultants.net
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