INFLIGHT: OVERVIEW Raising the conversion stakes


Despite its challenges, inflight remains a fertile ground for testing new ideas and refining existing ones. Luke Barras-Hill asks stakeholders for their feedback on the business and considers whether enhanced Wi-Fi connectivity can help unlock the selling opportunity.


Based on an analysis of 184


carriers, the value of global airline ancillary revenues were estimated at $82.2bn (+22%) in 2017, reveals IdeaWorksCompany and CarTrawler. The majority of this figure, which


accounts for approximately 10.6% of airlines’ $776bn in estimated global revenues, was accounted for by customised services, checked baggage fees, sale of frequent flyer miles and commissions on hotel bookings. Based on IATA’s calculation that


Duty free remains a notable contributor to ancillary revenues on traditional airlines outside the US. Source IdeaWorks/CarTrawler.


I


Above: Rebecca Harwood Lincoln, Travel Retail Director, Swiss Eyewear Group.


t is no secret that Inflight retail has faced a challenging few years. Global sales declined


by 6.6% to $2.47bn in 2016, with growth relatively flat in Q1 2017, according to preliminary results from Generation Research. Onboard retail and ancillary


revenue provider Guestlogix believes airlines are sitting on a wealth of customer data, but lack the technology to translate core retail analytics into sales. It claims that only 7.5% of


passengers make onboard purchases, which is all the more remarkable given the rapid rise of ancillary revenues.


“I’m confident we’re going to see a lot more personalisation and customised offers come into play, similar to successful on-the-ground brands like Starbucks and Amazon.”


Robin Hopper,


Senior Vice President Product & Marketing, Guestlogix


32 TRBUSINESS


airlines carried 4.1bn passengers last year spending a total of $776bn worldwide, the CarTrawler report points to an impressive per passenger ancillary yield of $20.13. More generally when it comes


to duty free inflight, Guestlogix claims that “only 7.5% of passengers make onboard purchases – a conversion rate that has not been improved in years, despite higher ancillary revenues overall (largely from fare unbundling).” Robin Hopper, Senior Vice


President Product & Marketing Guestlogix comments: “Overall, we’ve seen inflight to be flat across our customer base for the past several years. “Outliers that have outperformed


have been the airlines that use their onboard retail platform to extend their offerings to the entire day of travel. “By offering items like jumping the


boarding line or pre-ordering food from the moment the passenger purchases their ticket, not only has the window for revenue expanded greatly, but passengers now have some control over their journey. It allows them to customise some additional aspects of their trip.” Aside greater partnerships to


enable more flexible purchases for delivery at the arrivals gate or destination, Hopper wants to see more frictionless payments for


duty free.


Personalisation game In addition, he says the ability to pay to customise certain aspects of a trip helps to alleviate the feeling of being forced to pay for services such as baggage fees that many are used to receiving on a complimentary basis. “The bright spot is that airlines


are making this connection between ancillary revenue and passenger experience,” explains Hopper. “We’re going to see a lot more


personalisation and customised offers come into play, similar to successful on-the-ground brands like Starbucks and Amazon.” Yet, the stark reality of today’s


competitive inflight market means that placing offers in the hands of passengers does not always translate to increased sales, favourable margins and sell-out. “Our inflight business is slowing


declining,” admits Klaus Mellin, Tax Free Trade, which operates as P&G’s sales agency for travel retail. “This has to do with the high


margin demand combined often with very high advertising costs or listing fees and declining unit sales as the product range is increasing. “For this reason, we have reduced


our efforts to gain listings onboard airlines and will only accept listings if it makes sense for both parties. Aside a desire to improve the


mixture of margin and advertising costs, Mellin believes that presentation of products via carriers’ onboard magazines and inflight entertainment systems (IFE), including pre-order functionality, remains key to lifting the offer. More creativity within inflight


magazines to increase interest and browsing is something Swiss Eyewear Group’s Travel Retail Director Rebecca Harwood Lincoln believes can be improved. However, aside greater choice onboard, she believes one way


FEBRUARY 2018


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62