Around $ 22.6 billion – is the estimated additional revenue in 2010 that airlines are generating by direct sales to passengers or additional trip-related services, the so-called ancillary services. An increase in the years to come is expected.
On the occasion of the PASS Travel Talk, Farelogix CEO, Jim Davidson pointed out the huge revenue that is possible, by unbundling flights into individual services to complement other services and then pricing these “modules”, such as Door-to-door baggage service, lounge access or jump-the-line. The customer receives and pays only what he wants – Click & Buy.
The idea is nothing new. Especially Low Cost Airlines have been using these additional services for a long time to get ahead of their competition and to stand out. Over the base price, this is sometimes not possible. “A seat is a seat. Airlines have to go other ways to offer their customers something special and additional services are the perfect tool to do that. “said Davidson.
But the potential is currently underused and is far from exhausted: not the customer is the center of attention, but the existing technology. The current technology systems are inadequate when it comes to displaying the bandwidth of additional services. “In the first place there have to be services that offer benefits for the customer and what he wants to buy” said Davidson.
The concept of additional services must be the strategy. Michael Strauss, CEO of PASS Consulting Corp. and Head of the Business Unit Travel Worldwide, says that this is a long overdue development, “Who is my client? What does he want? This question must be the focal point for product development. Technology providers need to listen to exactly what customers want. “Customer oriented systems offer the ability to create custom-tailored service, and therefore increase customer satisfaction or retention.
If the strategy of unbundling and instead offering additional services works out, it could benefit all participants of the value chain, especially the customer. Michael shares his thoughts about this topic in his new book titled “Value Creation in Travel Distribution” detailing the current inadequacies and the distribution struggle in the travel industry and offering no-nonsense solutions to address them.
On November 11th PASS invited Jim Davidson to talk about ancillary revenues to a selected European audience at PASS’s Performance Center in Frankfurt, Germany. To learn more about Jims’ views and to see how he reacted to critical questions compiled by Michael Strauss about one of the hottest industry movements: Watch the webcast on our website.
Image by Artens