Focus on AncillAry revenue
easyJet generating revenue
carte services is tailored as closely as possible to the profile of each group. Flexible web technology monitors what
each group is ordering, and the offering is adjusted accordingly. A strong social media presence and key partnership with hotel bookings, insurance and car hire firms complete the strategy. Rob Thorne, head of loyalty at IBS Software
Services, stressed the importance of loyal customers with the familiar formula E= Mc2, where E is revenue, M is the customer and c is loyalty. Repeat customers become more profitable over time, and it costs five times more to acquire a new customer than to retain one. He also stressed that information was
the key; airlines should use alliances and partnerships to get more data on their customers. It is another simple equation: more customers + more information + more revenue. For anyone questioning the worth
Mega Event Q&A
We asked Michael Smith, Airline Information, about the conference: How were delegates affected
by the American Airlines bankruptcy? Most delegates knew that AA had gone into the re-organisation with plenty of cash and that most airlines emerge successfully from Chapter 11. I have since flown four times on AA and they are certainly operating normally – and all the flights were packed!
Do you feel that the news added more value to the focuses of the conference –
of customer data, Thorne pointed to the birth of the first JV currency Avios, which exploits the size of its database and the scope of its partners to give it critical mass in the market. Thorne summed it up with a quote attributed to that wise pundit Anon: “Pursuit of revenue is pursuit of loyalty and successfully pursuing both is the key to profit.” Rupert Duchesne, ceo AIMIA, pursued a similar theme in his presentation: ‘Turning Customer Data into Revenue’. He pointed out that Frequent Flier Programmes (FFPs) have a head start in engendering loyalty in the customer, in that every action serves an existing relationship. Offering valued rewards builds a ‘sticky’ relationship that is the best defence against rival promotions. Chris Gardner, md On Touch global merchandising, Guestlogix (pictured) gave a rough breakdown of the AR market as FFP 50%, baggage
20%, and other 30%. Onboard is the only place where the retailer has the customer’s undivided attention, and he saw a huge opportunity for selling duty-free, IFE and virtual shopping. He quoted a recent survey by Visa that showed travellers spend 37% of their budget on fares and hotels, and 63% on transport, shopping etc.
innovation in the airline industry? I think it just reinforced how thin the margins were in the business and how the industry needs to focus continually on costs (partly through innovation) to be able to stay in the game.
What was the buzz about AR: any new ideas, new technologies? Dynamic Currency Conversion (DCC) was the winner of the Lions’ Den and went over extremely well with the audience, also the flying
iPads.The product that
MI.Airline is offering also has a payments part to it (you can enter credit card details into the tablet and secure a sale) and that proved popular. Apps and mobile are another big buzz area.
The Ideaworks guide to finding AR bliss by Jay Sorenson
• A la carte pricing should support the brand, not change it.
• Link fees to your business model, not to cost increases.
• Seek wisdom from customers and frontline employees.
• Create a new product, not a new fee. • Anticipate change – don’t be surprised when it arrives through alliances and partnerships.
• AR is not an ad-hoc project, it’s meaningful cash flow.
Where the world is heading in 2012: • Charging fees for checked baggage systemwide.
• Offering premium seat choices for a price. • Providing early boarding benefits.
What you should consider for the future: • Linking your FFP to AR activities. • Creating annual products for à la carte services.
• Selling upgraded meal options.
CONTACT US
OnBoard Hospitality's AR Focus is now a regular feature. If you have a new product, new technology, a relevant report, or a new partnership to announce do email richard@appinpublishing.
co.uk (text only, please). Please send any picture files, marked AR in the subject line, direct to
jo.austin@
onboardhospitality.com.
www.onboardhospitality.com 51
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