Interview with Ho Hoong Mau, Regional Director, APAC Sales, Plusgrade, and Paul Carroll, Group Chief Revenue and Network Officer, AirAsia
At Aviation Festival Asia in Singapore, AirAsia and Plusgrade announced their expansive multi-year and multi-product partnership. This will give AirAsia customers the opportunity to bid for upgrades and reserve extra seating space for travellers.
The collaboration between the ancillary revenue solutions provider and Asia’s leading low-cost carrier develops the airline’s ancillary revenue and expands Plusgrade’s presence in the APAC region.
To learn more about the partnership and its wider significance, watch this short five-minute interview.
Questions asked:
How will this partnership between Plusgrade and AirAsia enhance the overall customer experience of airline travelers? Is this going to be available for all the AirAsia brands including Thai AirAsia X, AirAsia Indonesia, AirAsia Philippines etc?
Can you expand on this interesting opportunity that customers are enabled with to bid for more premium service offerings on flights?
How will this complement AirAsia’s overall ancillary revenue strategy? Flatbeds and hotbeds for bidding are obviously great offerings; will there be other collaborations with Plusgrade in the future (like speedpass etc)?
How do you think this partnership aligns with Plusgrade’s strategic direction? And will this partnership lead to future ventures with AirAsia?
As a leader in the ancillary revenue and commercial travel industry, how do you think this partnership and venture will shape the outlook of the industry in the near and medium term?
Letsfly Co-founder – 3 Key Elements For Airlines & Retailers To Improve Distribution Strategies
The travel & airline industry always undergoes a rapidly changing commercial landscape. Understanding how to navigate it is a key component of success.
One of the biggest challenges airlines face is the shifting dynamics between carriers and their distribution partners. Could this be a sign of fragmentation for airline distribution? If so, then could there be signs of reaggregation emerging on the horizon?
GDS to NDC and Direct API
GDS has historically dominated the distribution market, and airlines must seek flexible and cost-effective distribution solutions and other alternatives. As a result, Next Generation Distribution Solutions (NDC, Direct API) surged in popularity as they offered more agile adoption methods.
However, there are still critical aspects that require special attention, and airlines and retailers must first know how to analyze them, before defining their approach. And that begins by looking beyond the traditional solutions, and preparing for success by knowing how to effectively adopt a New Distribution Solution.
How to prepare for success with a New Distribution Solution
Kelvin Fu, Co-founder of Letsfly (a provider of high-quality content so airlines and travel organizations lower distribution costs and reach new markets), believes that the New Distribution Solution model presents both challenges and opportunities. Which is why he states that it’s important for airlines and retailers to first understand three key aspects to prioritize their efforts.
The 3 critical elements airlines and retailers must prioritize
How to cover more markets at lower costs for airlines
How to support the sales of diversified products more flexibly, such as ancillaries and bundles
How to ensure a satisfactory ticket purchase and post-sales service experience for travelers under the New Distribution Solution
To achieve success, companies need to focus on important areas such as expanding market coverage while reducing costs, supporting the sales of diversified products like ancillaries and bundles, ensuring a seamless customer experience throughout the ticket purchasing process and post-sales services, and assessing technical performance and effectiveness.
According to Kelvin Fu, Co-founder, Letsfly:
“It’s crucial to have a distributor with extensive and quick market coverage, who can establish direct API connections, and handles the entire case, this especially means post-service. Only in this way will distribution strategies be optimized in the New Distribution Solution model”
How to solve the 3 critical key elements:
Ensure your distributor has extensive and quick market coverage.
Reduce third-party process, build direct API connection with distributors.
Partner with a distributor that provides end-to-end solutions to your case.
By focusing on these key aspects and collaborating with distribution partners – airlines and retailers can be in a position to adapt in this rapidly changing landscape. Through this, they optimize their distribution strategies and provide a better overall experience for their customers.
“It is essential to pay attention to issues such as market coverage, product diversification, customer experience, and technical performance to succeed in a rapidly changing market. By doing so, airlines and retailers can benefit from greater efficiency, cost savings, and customer satisfaction.” – Kelvin Fu, Co-founder, Letsfly.
New Distribution Solutions have been around for some time, but airlines always need to adapt to changing consumer preferences and seek to diversify their product offerings. As a result, more airlines have been adopting lightweight and flexible distribution methods, moving away from the traditional GDS model. While this trend was initially led by low-cost carriers looking to save costs, it has evolved into a more fragmented market.
Flexible, Adaptable, and Tailored Solutions
To tackle this issue, Letsfly offers tailored solutions that are more flexible and adaptable. The goal is to offer airlines and retailers a distribution solution that helps expand market coverage while keeping costs low, support the sales of diversified products, ensure satisfactory customer experiences, and improve technical performance.
“New innovations will continue to emerge and disrupt the industry, as more companies are open to adopt these solutions. Those who understand how to navigate this landscape successfully can expect to achieve greater efficiency, cost savings, and customer satisfaction.” – Kelvin Fu, Co-founder, Letsfly.
Collaboration and Customer-Centric Strategies
As with any industry, the travel, aviation and hospitality sector will always continue to evolve, and collaboration with distribution partners is key to success in this ever-changing industry. Airlines and retailers must be open to embrace new technologies and collaborate closely with their distribution partners to achieve success.
Many new companies are emerging to innovate and potentially replace the traditional GDS’s position, and become the new dominant solution. So it is important for airlines and retailers to work together with their distribution partners.
This will help to foster long-lasting relationships with customers in order to remain competitive in an industry that is constantly changing.
In the end, success in the travel industry is all about the customer. By investing in strategies that are customer-centric and tailored to their needs, airlines and retailers can build long-lasting relationships that will keep customers coming back for more.
It won’t be an easy road, but those willing to embrace change, experiment with new approaches, and collaborate with their distribution partners will be the ones that thrive in it.
Letsfly is an innovative company focused on providing high-quality content to travel organizations while helping airlines lower their distribution costs, reach new markets and maximize profit. Its mission is to improve travel distribution with cutting-edge technology and provide long lasting value to its customers. The company was founded in 2014, with headquarters in Beijing (China) and offices in Hong Kong, Sydney, Singapore, and Dublin.
Smart airline retailing: The new merchandising and revenue frontier
During the pandemic, when air passenger traffic was at an all-time low, a few smart airlines demonstrated record-breaking sales by earning even more than 50% of their revenue from their ancillary products and services. Indeed, ancillary sales revenue is no longer seen as an airline’s secondary option. Instead, it has now taken a front seat in the airline business model.
In this context, we need to note that the traditional way of retailing does not cater to today’s tech-savvy customer who is information-rich but time-poor. In the current era of disruptive technological changes and a highly commoditized travel world, airlines have a cut-throat competition where products and services that may be cutting edge today can become outdated soon.
Adopting the advanced retailing concept in the airline industry is going to be one of the biggest transformations in the industry.
Customer loyalty is not what it used to be. With increased transparency on comparative prices and easier access to booking tools, travelers are increasingly loyal to those that provide the best prices and experiences. These fluctuating trends and rising consumer expectations make it challenging for airlines to keep up with the changing times.
The USP in this competition is the outstanding customer experience that revolves around a customer-centric approach. This allows an airline to deliver a positive and personalized experience at every stage of its customer journey. They can interact with customers based on their needs, adopt a fact-based approach to decisions using customer data as a primary source of insight, and embrace new channels to build a customer-focused culture, creating value across the way.
Many forward-thinking airlines have already embarked on adopting smart merchandising strategies to deliver a tailored, personalized, and seamless experience to individual travelers.
Smart merchandising strategies driven by an AI-based retail rule engine
In this blog, we will attempt to explore various best practices, frameworks, strategies, and techniques for an airline to deploy a successful merchandising strategy. This strategy will deliver exceptional customer experiences along with higher conversion rates.
The mantra behind successful merchandising revolves around five key areas, and they are:
Identify the right personas for your travelers
Contextualize your offer in real-time
Deploying the best packaging techniques
Target the right time and stage of the journey
Deliver a seamless digital experience
1. Define the right persona for your travelers
An airline caters to millions of passengers in a year. Every customer has unique needs and has a different perception of products and service values. If you understand those differences and are flexible in how you offer the services they need, you can gain a competitive advantage.
Customer segmentation is a strategy to divide customers into various groups or personas having similar characteristics, wants, and needs.
Traditionally, airlines used to segment customers based on the booking class, which today holds limited relevance and doesn’t reflect complex passenger behavior. To overcome this challenge, airlines can leverage technologies like artificial intelligence and machine learning to develop self-learning models which analyze the below-listed factors and self-calibrate to optimize the personas.
Geographical: Country, state, climate, food habits, etc.
Demographic: Age, gender, marital status, family size, nationality, ethnicity
Behavioral: Spending pattern, price sensitivity, need for flexibility, loyalty index, CLI
At the same time, each persona defined by the airline must be:
Measurable: In terms of volume, purchasing power, and other characteristics, an airline can predict as well as target the revenue and profit a segment can make.
Accessible: The persona is easily accessible so that the airline can approach them.
Differentiable: Each persona must be unique and reacts differently to the market mix.
Actionable: Airlines be able to provide value to the segment.
A good segmentation strategy should have a persona for each passenger category and reveal underserved segments. For example, an airline receives most of its bookings from guest users, and the airline does not possess any historical data individually for these customers. But, by using engaging factors like demographical and geographical, airlines can achieve segmentation. In a recent survey conducted with an airline, it was discovered that young travelers between the age of 18-35 going from Oslo to Switzerland during winter had shown an affinity towards XL baggage for carrying their skiing kits. So, using such insights, airlines can target customers with similar personas to elevate sales.
2. Contextualize your offer in real-time
Now that we know each traveler’s persona has specific needs, the second step is to set the right context so that the customer understands the value that a recommended ancillary is going to deliver. For example, a business executive taking an early morning flight from an airport that experiences a high passenger load around the time of departure can open an opportunity to sell fast-track ancillary.
Contextualizing helps the traveler understand the benefits of the offer then and there.
Airlines can tap into such opportunities by leveraging an intelligent merchandising engine. These build a knowledge graph for each persona to understand their affinities towards ancillaries. They then evaluate it with real-time contexts like load factors, routes, flight duration, and peak hours through a robust scoring algorithm for ancillary recommendation across various stages of the travel lifecycle. Doing so significantly improves the likelihood of making a purchase hence, delivering a higher conversion rate.
3. Deploy the best packaging techniques
Airlines use various offer creation and packaging techniques like bundled ancillaries, unbundled ancillaries, and hybrid bundling (branded fares) to personalize an offer. Each of these techniques plays a role when targeted to the right customer. Branded fares or bundled ancillaries deliver a simple approach to building an all-inclusive fare, reducing the complexity of choice and making comparison and purchase decisions easier for passengers. But at the same time, with evolving customer expectations, it is a huge challenge for an airline to decide which ancillary items to bundle and which items to offer separately.
The best-fit package results in value to the customer and higher per-passenger revenue for the airline.
Deploying an intelligent merchandising engine that can generate multidimensional insights on ancillary sales performance across all channels and travel lifecycles can help revenue managers optimize their packaging techniques or even take a step ahead to tailor the bundles in real-time for a customer.
4. Target the right time and stage of the journey
Airlines can maximize their ancillary sales by encouraging customers at various stages of their travel lifecycle, beginning from the inspiration that starts the planning in the first place, all the way through the booking process, to pre-and post-trip engagement. Each stage offers a unique upsell or cross-sell opportunity that a traveler may consider.
The most important thing that airlines need to keep in mind here is to offer the customer the right product at the right time.
Not everything can be sold during the booking; travelers develop their needs as they proceed. Airlines can use their data to understand customers’ specific needs to determine the behavioral factors, purchasing patterns, and affinity factors for each persona.
The choice of the product can be determined by the customer persona and contextualization. In contrast, the stage of the journey should be targeted, considering when it will be needed the most. On the other hand, the choice of the channel can be determined by the accessibility factors, and the price should prove to be a good value to the customer – it should neither be too high nor too less.
For instance, a family of four going for a week-long summer vacation would be interested in booking a hotel room at the time of flight booking. A few days before departure, when they start packing, they might opt for extra luggage and finally may need a taxi on the day of departure. Whereas a backpacker who is a price-sensitive traveler may look for a cozy hostel room at the time of booking and may be interested in some good adventure deals as per destination.
5. Deliver a seamless digital experience
Delivering a one-click buying experience that enables customers to make informed purchases can be a differentiator among competitors. Along with the perfect offer, an airline should focus on the user experience they deliver to the customer.
The user experience should be fast, easy, and intuitive so that a customer can easily navigate to buy and manage their purchases.
An average user experience can easily make customers disinterested, even if they see a good offer. On the other hand, a good user experience delivers high-quality content and information about a product, which in turn converts lookers into bookers.
Airlines need to understand the challenges associated with different distribution channels, primarily indirect and direct.
Indirect channels
From a customer perspective, shopping through an indirect channel provides a disjointed user experience where they are not presented with personalized offers and don’t have access to the products they could purchase from an airline. From the airline’s perspective, they have to manage multiple EMDs for the ancillary purchase per ticket while distributing via a GDS channel.
Direct channels
To overcome these challenges, digitally matured airlines have adopted IATA standards such as New Distribution Capability (NDC) and ONE Order to modernize their product retailing and create a transparent shopping experience. NDC allows airlines to easily sell ancillary along with rich content directly to aggregators like OTA and GDS via a set of standard XML APIs (which was not possible earlier) and get away with the challenges of EMD issuance for ancillary purchases.
The capabilities of NDC clubbed with AI models can help airlines build a smart & advanced retailing system that offers customers a better product and more value. NDC enables airlines to sell flights and ancillaries the retail way, and AI-based technologies enable the airlines to add a personalized and contextual wrapper, so you are selling the right thing and have a higher look-to-book ratio. This enables the airline to transition from non-personal selling to retail-driven personalized selling.
Conclusion
The power of digital airline retailing is no more a secret. Revenue managers have identified its real potential and are leveraging it to target more sales. As we enter the digital revolution, the right set of techniques along with technologies like AI/ ML and big data could be the first step towards deploying successful merchandising strategies towards building a great customer experience and path to profitability.
Perth Airport set to open a virtual reality lounge
This May, Perth Airport will be introducing a Gaming Point VR lounge delivered by Travel Point Group. The lounge will transform the waiting process with access to a hi-tech, VR gaming experience. Located at Terminal 1 International before customs and security screening, the lounge will be accessible to all domestic and international passengers as well as the general public.
Unusually, the lounge will include one immersive VR escape room for up to five players per session, with each session lasting 30-45 minutes. Additionally, people can choose from a range of individual high-speed internet gaming stations linked to the steam network allowing players to continue on from their own accounts or enjoy solo gaming options as newcomers.
Growing rapidly, the VR market generated 4.7 billion USD in 2022 and, according to Deloitte research, will generate an estimated 7 billion USD by the end of 2023. The technology already has multiple existing applications within the aviation industry ranging from entertainment to teaching. However, it remains “relatively niche” amongst the general population for the time being, with an active installed base of just 22 million in 2023. This novelty is partly where the airport VR experience can tap in to this growth area, offering people a new experience in an unexpected setting.
Looking towards the future, Graeme Stewart, Director of Point Group said:
“Point Group is in advanced discussions with many major airports around the globe to deliver exciting new experiential offers using virtual reality and high-speed gaming facilities.”
Wanting to create new experiences in airports that move beyond eating, drinking, and shopping, Gaming Point began as an ambitious step to introduce VR gaming into an airport setting. By May, the lounge will offer a innovative, collaborative experience for passengers, whilst simultaneously diversifying the retail offering at Perth Airport.
The latest interactive, AI-powered retail experience at Changi Airport
A partnership between Pernod Ricard Global Travel Retail and Lotte Duty Free has produced a unique, AI powered, experience redefining retail in an airport setting. This “first of its kind” for an airport space, pushes the boundaries of retail with its combination of technology, personalisation, and imagination.
Encapsulating the world-famous airport’s customer focused and technology driven vision, the 33-square-feet boutique has a range of immersive experiences and services for passengers, including an AI ambassador, digitalised merchandising units, robot bartenders, and VIP tastings.
“We are proud to launch the Martell AI-powered boutique, which harnesses the power of data and technology to deliver personalized customer-centric experiences; a key tenet of the Changi Airport retail experience.”
Located in Changi’s Terminal 1 Lotte Duty Free store, the interactive exhibit features the ‘Martell Untouchable Taste’ tool, which “guides shoppers through the Martell range, and provides personalized tasting recommendations based on their preferences. This recommendation is then sent to the Martell robot bartender, who proceeds to serve the desired beverage to the customer.”
With Changi consistently positioning itself at the forefront of innovation, the integration of this “retail theatre” continues to elevate the airport experience though new and engaging technologies.
IBS Software survey identifies the shortcomings of airline retail
Yesterday, IBS Software released new survey results highlighting the shortcomings of airline retail in its current form. The data identifies multiple areas where airlines are failing to capitalise on ancillary revenue and points towards the industries setting expectations of the online buying process. With 83 per cent of respondents planning to fly to a leisure destination in the next six months, the value in refining the experience to align with customer expectations is self-evident.
As discussed by Paul Byrne, VP iFly Retail at IBS Software, updating is crucial to remaining competitive.
“As more and more industries invest in Amazon-esque tactics to compete for consumer spend, it’s important airlines don’t pass up the opportunity on the table.”
Key insights from the survey include:
93 per cent of consumers would buy services like excursions and car rental from their airline in they could.
56 per cent of recent flyers would buy additional services from an airline if the booking and checkout online shopping experience was closer to that of fashion retailers and online food shops.
36 per cent of those asked said booking a flight online is more time consuming and complicated than other online retail experiences.
10 per cent of recent flyers said they would book all elements of a holiday with their airline if they could.
24 per cent of people surveyed said the main benefit of booking multiple elements of their trip in one transaction would be having all confirmation details in one place
19 per cent of people surveyed said the main benefit of booking multiple elements of their trip in one transaction would be having one provider to deal with if something goes wrong.
The survey covers 2,000 consumers who have travelled by air for leisure in the last 18 months with 1,000 respondents from the US and UK respectively.
Finnair have announced they will be discontinuing both in-flight and pre-order retail sales on all flights this spring.
The decision follows suit with their 2020 choice to discontinue inflight sales within the EU. The 2020 announcement was explained as part of an overall goal to reduce the weight of aircrafts in order to reduce emissions and lower spending on fuel.
However, the flag carrier of Finland has now revealed these sales will end in all flights on 28 February 2023. Pertinently, this latest shift has been positioned as a response to changing consumer habits. Valtteri Helve, Finnair Head of Product Offering said:
“Onboard and pre-order shopping has become a less important service among our customers […] It is time to take the next step and discontinue them worldwide.”
As passengers prioritise the online Finnair shop, the airline’s response highlights an interesting question mark surrounding the future of airline retail. With shifting consumer behaviours, the new balance between e-commerce sales and physical in-flight retail is yet to be firmly decided.
Qatar Airways’ innovative world first loyalty initiative
Yesterday (24 January), Qatar Airways Privilege Club (QRPC) and Qatar Duty Free launched a ‘world first’ innovative partnership. Now, members of the QRPC will be able to collect and use Avios as a part payment option across almost 200 outlets at Hamad international Airport (HIA).
As the airline’s reward currency, Avios can now be used as payment across retail brands as well as food and beverage outlets at Doha’s Hamad International Airport (DOH). Working in tandem with this, Qatar Airways will also reward passengers at all departure points with Avios points upon check in. These will be credited up to 120 minutes before flight departure.
Qatar Airways Group Chief Executive, Mr Akbar Al Baker said:
“We have enhanced and upgraded our redemption options for our loyalty members and we are enabling access to a truly unique airport shopping and dining experience. A first the world initiative, this demonstrates our commitment for going the extra mile when enhancing the quality of our offerings by providing members with a seamless experience. We encourage everyone travelling through HIA to avail themselves of this experience and opportunity as there has never been an easier way to collect and spend Avios.”
Avios can be collected when members fly with Qatar Airways, oneworld airlines, or QR’s airline partners. They can also be collected with more than 100 global partners and co-branded payment cards.
The new partnership encourages engagement with the airline’s loyalty programme. It provides a strong and convenient incentive for passengers to sign up to Privilege Club, leveraging the airline’s fortunate position as interconnected with the airport and duty-free company.
Mr Akhar Al Baker, CEO Qatar Airways will be speaking on a Keynote CEO panel at Aviation Festival Asia exploring future technologies and trends that we can expect to see emerge in the retail, loyalty, and customer experience space.
As the world reopened following the global pandemic, the absence of one international giant’s presence was felt. Since then, news that China has relaxed its strict Covid-19 travel restrictions has caused a buzz of excitement, and it is easy to understand why.
Before Covid, China was one of the world’s most important source of international travellers. The nation composed nearly one-quarter of total international arrivals to ASEAN states, making it the leading source of foreign tourist arrivals to the ten member states of the Association of Southeast Asian Nations (ASEAN). These states include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Pre-pandemic, in 2019, China’s 155 million tourists spent $253 billion overseas. This figure was less than in the previous year, where Chinese tourists spent an estimated $277 billion abroad. As the world tourism industry has slowly started to recover, the absence of the monumental Chinese outbound tourist market has slowed the pace of recovery.
Discussing the relaxation of China’s measures, Julia Simpson, President & CEO WTTC identified outbound Chinese visitors as “among the most valuable in an economic sense.” According to the WTTC, Chinese visitors’ spending represented 15 per-cent of the grand total in 2019.
Trip.com Group, a Chinese multinational online travel company revealed that, following the announced easing of restrictions, on the morning of 27 December, Trip.com recorded a 254 per-cent increase in mainland China’s outbound flight bookings compared to a day earlier. This was led with searches for flights to Singapore, South Korea, Hong Kong, Japan, and Thailand.
Inbound international travel also looked hopeful with Trip.com Group data showing bookings increasing 412 per-cent from the day before. Australia, Germany, Japan, Singapore, and Hong Kong SAR were at the top of the list for numbers of inbound travellers.
Lunar New Year holiday begins on 22 January and is typically a period for an outbound travel boom. Trip.com Group’s data has shown searches for trips during this period to Japan, Thailand, South Korea, the United States, Singapore, Malaysia, Australia, and the UK were the most searched for destinations on 27 December.
Although the shape of China’s return to tourism is still unclear, with many postulating that spending habits have altered and demand shifted, the return of Chinese tourists to the market has been highly anticipated.
Interview with Yin May Lau, Group Chief Marketing and Customer Experience Officer, Malaysia Airlines – “Our customers are our centre of gravity”
In the run up to Aviation Festival Asia 2023, Yin May Lau discussed the airline’s approach to the customer from several angles.
The interview looks at how to remain customer centric, the passenger journey, digital transformation, giving customers agency, the pandemic, and tying Malaysian culture into the airline’s product.
Within the interview, Yin May explained the approach the airline adopts with regards to the customer. At Malaysia Airlines, customer centricity is of paramount importance to the entire organisation. Customer satisfaction is monitored across ten touchpoints which begin far before the passenger boards the plane. Tracking this allows the airline to understand any deviations in the passenger experience and respond to this, rectifying any problems and amplifying the successes.
Yin May also explored what passengers want, discussing flexibility, convenience, and empowerment. As airlines are increasingly turning towards digital solutions, passengers are simultaneously becoming more technologically minded. Thus, the agency that the digital transformation can give the customer is welcomed.
Reflecting on the pandemic, Yin May highlighted that it was an extremely challenging time. However, within Malaysia Airlines it was simultaneously viewed as a time to expand employees’ skillsets, diversify the airline’s offering, and pull together as a team to ultimately provide customers with an enhanced product. One such improvement made during this time was the introduction of Journify. With 98 per-cent of flights grounded, the pandemic highlighted the vulnerability of solely relying on flights. Consequently, the airline developed Journify, their e-commerce platform, capitalising on the wider expenditure associated with travelling. Again, this emphasises Malaysia Airline’s commitment to the passenger journey more broadly.
The positive workplace culture of Malaysia Airlines is reflected back into their customer experience. One example Yin May gave highlighting the organisation’s culture took place during the pandemic. To ensure the employees of the airline could stay on during Covid, everyone from the assistant manager level and above took a pay cut, some up to 65 per-cent. Like other airlines who did not let staff go during the pandemic, Malaysia Airlines has hit the ground running.
Questions asked:
Could you describe the ways you position customer experience at the centre of your model?
How are you responding to the change in passenger expectations since the pandemic?
This year you put a fun twist on in-flight safety videos, can you give an example of other creative ways you are improving customer experience and engagement?
What role does culture play in your marketing?
Yin May will be speaking on omnichannel experience at Aviation Festival Asia, exploring ‘How have passenger expectations changed post-pandemic and how can we enhance passenger engagement levels?’
Study reveals which areas of the airport experience disappoint passengers
A new study by Airport Dimensions has revealed a rise in overall satisfaction with the airport experience. However, more importantly, the survey highlights the areas that airports are currently disappointing passengers.
The study conducted by Airport Dimensions as past of its ‘Tomorrow’s Traveller, Tomorrow’s Airport Experience’ research comprised over 6,000 travellers. People were asked about their current journey through the airport and asked what changes they would like to introduce to improve their experience.
Here are some of the key findings:
Overall satisfaction has increased in spite of the pandemic. 62 per-cent of travellers considered the airport an important and enjoyable part of their journey, a 2 per-cent increase from the figures of 2019.
There is a significant difference between satisfaction across regions. 86 per-cent of travellers from Singapore were satisfied with their overall airport experience versus 48 per-cent of Spanish travellers.
Gen Z and millennial passengers are almost twice as likely to enjoy the airport experience compared to those aged 76 and over.
The most popular choices for how to enhance the journey through the airport were: more comfortable seating areas (80 per-cent), a queue-free airport journey from arrival to departure (78 per-cent), and more public transportation options (73 per-cent).
Satisfaction levels for airport services were higher at landside (72 per-cent) and at gate (73 per-cent).
The satisfaction levels are lower around departures (64 per-cent) and facilities (52 per-cent).
Specific areas that travellers showed dissatisfaction was around the value for money in retail and dining establishments (24 per-cent), Wi-Fi speed and reliability (14 per-cent), and entertainment options (14 per-cent).
The survey showed an overall increase in satisfaction with the airport experience. However, the areas of dissatisfaction are of more interest, highlighting the services and developments that could elevate the experience as a whole.
Interview with Daniel Friedli, Travel in Motion – The APAC distribution landscape is “progressing but conservative”
In anticipation of the upcoming Aviation Festival Asia, Daniel Friedli answered some questions relating to distribution, new distribution capability (NDC), ONE Order, and the transition to modern retailing in the region.
Daniel is a Managing Director and Partner at Travel in Motion, a company which, with their partner Oystin Advisory, has years of experience bridging the gap between GDS business, the vendor, and the airline.
In this twenty-five-minute interview Daniel gave his perspective on the huge topic that is distribution in the Asia-Pacific region. Tackling this extensive subject, the Travel in Motion Partner identified areas of variation across the region providing a useful overview of the transformation, uptake, and challenges. Additionally, Daniel highlighted catalysts and barriers to change in the region, shedding light on the current landscape and cautiously drawing comparisons against other areas of the globe.
An important takeaway from the discussion was that many of these changes are costly and have repercussions that must be considered before integrating new systems. With all the future facing conversations concerning implementing updated systems, the complexities and costs around successfully installing new technology and systems cannot be understated.
The full list of questions asked is:
Could you give an overview of the distribution landscape in Asia?
Would you say the distribution is an area in which airlines are slightly hamstrung by legacy systems?
How have we seen COVID-19 impact the APAC region and how is this different to the rest of the world?
Can you explain the transformative impact NDC has had on distribution in the industry.
In what ways does NDC uptake vary from region to region?
ONE Order is still in its early stages, how do you see this developing in Asia?
Have there been problems transitioning to modern retailing with offer and order technology?
Why is it such an important time for the Asian aviation market to meet and discuss challenges in the industry?
What are you looking forward to at Aviation Festival Asia
The technology elevating the retail experience at airports
As airport retail evolves to keep up with changing consumer demands, technology has acted as a catalyst fuelling the change. One way technology is facilitating a frictionless, futuristic experience of airport retail is through checkout-free stores.
For the customer, the retail process could look like this:
Enter the store by tapping a credit card or scanning a QR code.
Pick the desired products.
Leave.
Benefitting the customer
These stores contribute to a contactless customer journey within the airport and provide an enhanced experience of airport retail. Through removing the need to queue, the passenger will be able to enjoy the offerings from the outlet without having to stand in tiresome checkout lines tapping their foot and checking their watch.
Benefiting the retailer and the airport
Importantly, while elevating passenger experience, the technology is also beneficial to both the retailer and the airport. Retailers have less work to do and can run with fewer staff and airports keep passengers seamlessly flowing through the airport.
Zippin is a provider of this checkout-free technology. Last month, Dallas Fort Worth (DFW) International Airport opened its first checkout-free store using Zippin’s technology. The technology is already in place in Tom Jobim International Airport in Rio de Janeiro and JFK International Airport in New York.
Krishna Motukuri, CEO and Co-founder, Zippin said:
“Self-checkout simply passes the work of the cashier on to the customer, increasing friction for the customer, which inevitably leads to frustration and errors and MORE work for retailers, in the end. Checkout-free works by removing friction and making retail operations substantially more efficient.”
Zippin is not the only provider of this technology. Amazon’s Just Walk Out technology facilitates a comparably seamless experience for customers. This technology was demonstrated last year at a Hudson Nonstop store at Chicago Midway International Airport.
IATA survey reports passengers want simplification and convenience
Surveying over 10,000 people from 222 countries, The International Air Transport Association (IATA) has revealed the results of its 2022 Global Passenger Survey (GPS). The survey shows the top priority for passengers’ travel experience are simplification and convenience.
Highlights from the survey
Technology and convenience:
Passengers see value in biometric identification. 75% of passengers want to use biometric data instead of passports and boarding passes. Over a third have already experienced using biometric identification in their travels, with an 88% satisfaction rate. But data protection remains a concern for about half of travelers.
Passengers are willing to complete processing elements off-airport. 44% of travelers identified check-in as their top pick for off-airport processing. Immigration procedures were the second most popular “top-pick” at 32%, followed by baggage. And 93% of passengers are interested in a special program for trusted travelers (background checks) to expedite security screening.
Passengers are interested in more options for baggage handling. 67% would be interested in home pick-up and delivery and 73% in remote check-in options. 80% of passengers said that would be more likely to check a bag if they could monitor it throughout the journey. And 50% said that they have used or would be interested in using an electronic bag tag.
Travelers were satisfied being able to pay with their preferred payment method which was available for 82% of travelers. Having access to planning and booking information in one single place was identified as being top priority.
Learning from the online Amazon experience
Discussing the survey, Muhammad Albakri, IATA Senior Vice President Financial Settlement and Distribution Services said:
“Today’s travellers expect the same online experience as they get from major retailers like Amazon. Airline retailing is driving the response to these needs. It enables airlines to present their full offer to travellers. And that puts the passenger in control of their travel experience with the ability to choose the travel options that they want with convenient payment options.”
Amazon set the benchmark for unrivalled customer experience. Placing the customer at its heart, the business worked to the vision of, “Earth’s most customer-centric company.” The Amazon Consumer Behaviour Report 2021 echoes the results of the IATA survey, identifying convenience as consumers’ second top priority. Through anticipating customer needs, offering frictionless processes, convenience, low prices, and personalisation, the brand established unparalleled loyalty.
The aviation world can learn a lot from how Amazon has placed the customer experience at the heart of its business. Utilising technology to offer hyper personalisation, an understanding of the individual customer and their needs, frictionless processes, and convenience the aviation industry can drive customer satisfaction.
How Qatar Airways are maximising their ancillary revenue from the World Cup
The World Cup is less than a month away, commencing on 20 November 2022. Estimates predict 1.5 million fans will attend in person and Qatar, with a population of 3 million, is preparing for 200,000 air passengers a day.
Qatar Airways, the Official Airline of FIFA has been preparing for this. Although revenue from plane tickets alone will be substantial, the airline is set to capitalise on ancillary revenue. Here are some ways the airline will be cashing in on ancillary revenue this World Cup.
“Revenue beyond the sale of tickets that is generated by direct sales to passengers, or indirectly as part of the travel experience.”
In-flight connectivity (IFC)
Inmarsat was selected as the IFC provider for Qatar Airways’ Boeing 787-9 and 737-10 fleet. Passengers on these flights will have access to live updates from matches, video replays, and livestreamed games during the course of their flight. Through Inmarsat’s GX Aviation broadband service, passengers will also be able to browse the internet, use email and messenger apps, scroll social media, and stream videos and music. This ‘Super Wi-Fi’ will be available for one-hour free access with an option to purchase full access for the remainder of the flight.
Bundle deals
Match Day Shuttle
The airline is also offering a Match Day Shuttle package which allows fans to fly in for a match and return on the same day. Included in the package is easy check-in, fast track immigration, and connections to stadiums.
Travel packages
Qatar Airways are also offering travel packages, advertising them as ‘the ultimate convenience.’ The packages include flights, accommodation, and match tickets.
With these bundles which are sold directly through the airline, Qatar Airways can profit from making their passengers’ lives more convenient.
Additional preparation for the World Cup
Cutting routes and growing employee numbers. Qatar Airways has been in the news lately with their plans to hire 10,000 more employees for the World Cup. However, it is unknown how many of these employees are permanent. The airline has also cut 18 destinations to make space for World Cup fans travelling to the region.
Ancillary revenues have played a key role for airlines during COVID-19 and in the years emerging from the pandemic, for more detail see here. In anticipation of the World Cup, Qatar Airways is capitalising on potential ancillary revenue in a variety of ways utilising technology and their network.
How Can Airlines Maximize Revenue From Existing Visitors?
Improving the sales performance across direct digital channels is a key objective for any modern airline. But with an army of users online at any one time, each looking for a flight or holiday specific to their individual needs, how can the aviation industry present the most relevant information to every single user?
Converting more users is a key target for most e-commerce sites, but maximizing revenue from each visitor is equally important. And to do that, you need to connect with your customers on a one-to-one level.
The challenge
Traditionally, airlines have segmented digital audiences with business rules. If people fulfilled certain criteria or acted in a particular way, they would be targeted as part of a segment. When an airline’s sales pace was slow, strategy often relied on offering vouchers or incentives to drive bookings to broad segments.
Whilst such offerings would improve booking pace, it was ultimately diluting the revenue taken by the airline by providing discounts or value adds to people who would have booked without any incentive. Segmentation simply can’t account for the varying motivations of individuals, treating everyone in the same group exactly the same way.
The challenge for airlines was set: how can they better profile – on an individual basis – every user to drive higher revenue through strategic sales-led initiatives, avoiding revenue dilution whilst achieving higher conversion goals?
The solution
Machine learning is the key to understanding individual online users in real-time and at scale. By implementing a personalization platform, a customer-centric approach is able to form the basis of every sales and marketing decision.
Utilizing real-time customer-level signals throughout the user journey, technology can respond automatically to shopping behaviors. At BD4, we call this ‘Human touch e-commerce’ – and our work within the aviation and travel industry proves that individual-level modeling works.
AI-driven profiling and decision-making solution drives real-time interventions which:
Increased revenue per user
Minimize churn
Reduce retail friction
Avoid unnecessary discounting
Ensure effective allocation of incentive funds and optimize budgets
With a deep understanding and connection to customers, airlines are able to present individually tailored messages which are relevant to each person within their broad audience profile. Deploying automated AI allows airlines to offer digital interventions at the most appropriate stage of the booking process, removing the risk of revenue dilution for customers who were already determined to book.
To prove the effectiveness of a targeted approach, multiple tests under transparent control periods are run, from the initial Learning phase (as we know every airline and indeed every company has nuances in their audiences), to a Training period. This is followed by a Test and Control period, highlighting the impact of the tailored interventions, before implementing the optimized solution across the site. Driven by AI technology, the platform continually learns and improves the algorithms to ensure airlines are always adapting, and moving forward with their audience.
The latest AI-driven interventions for airline customers focus on providing intelligent incentives to drive bookings – intelligent in a way that only those users who needed an incentive to be converted saw a discount campaign. The individually targeted incentives have shown up to 6% uplift in revenue per user, and saved more than USD 1 million versus a more traditional, scatter-gun segmented approach to distributing vouchers and incentives. All this was achieved with a significant return on investment – up to 8 times! Read more about this specific project in our case study .
Helping airlines form meaningful connections with their customers
At BD4, we work with multiple airlines and well-known holiday brands, including easyJet holidays, Royal Air Maroc, and Etihad Airways.
The different stages of the digital buying journey enables a multitude of use-cases to connect with customers on a personal level. By interacting with customers on a one-to-one level, technology is able to humanize a company within the digital realm. And it’s this human touch e-commerce that helps companies maximize the value from each customer.
Discover more about BD4 online or visit them on stand 12.610 during the World Aviation Festival 2022.
The 2022 CarTrawler Yearbook of Ancillary Revenue published by IdeasWorksCompany, is a comprehensive analysis of the ancillary revenue performance of 75 global airlines. Released this week, the report breaks down ancillary revenue performance from 2019 to 2021, investigates how airlines have recovered since the pandemic, the new or expanded ancillary products they’ve introduced to accommodate changing customer needs and behaviours, and much more.
Responding to a crisis
The airline industry has certainly had a tough time over the last two years, and the aftershocks are not over yet, with staff shortages due to illness still impacting travel. However, there has been strong recovery, thanks in part to the airlines’ ability to pivot and respond not only to changing mandates, but to changing customer needs and behaviour.
Ancillary products and their revenue have been a key driver of the airlines’ path to recovery, and The2022 CarTrawler Yearbook of Ancillary Revenue shows promising results from the 75 airlines covered. Due to the pandemic, the yearbook is comparing 2021 to 2019 rather than 2020, to give a more accurate view of ancillary revenue performance after the pandemic.
Recovery is happening
In 2019, the global estimate of ancillary revenue was $840 billion. In 2021, that estimate is $462 billion – a significant decrease – although still a 32% increase on 2020’s performance ($350 billion), showing strong recovery, despite ongoing obstacles. While some markets (Asia and the South Pacific) are still not travelling at the same rate as pre-pandemic, most markets have shown strong travel increases from 2020, with MENA at 102% YOY in 2021, Europe at 84.3% YOY and North America at 79% YOY.
Key highlights
Many airlines saw significant increases in ancillary revenue from 2019 to 2021, including Wizz Air, the top performing airline whose ancillary revenue accounts for 56% of total revenue, an increase of 10 percentage points from 2019. Please see article here to learn more about Wizz Air’s ancillary revenue.
All carrier categories saw their ancillary revenue increase from 2019 to 2021 with low cost carriers seeing the highest increase at 36.3%.
Ancillary revenue per passenger also increased significantly with the top performer, HK Express, now having a per passenger revenue of $88.21 – an increase of $60.36 from 2019.
Frequent fliers
The five largest US airlines (Alaska, American Delta, Southwest, and United) generated $16.4 billion from their frequent flyer programs in 2021 – down from $19.5 billion in 2019, however, when this revenue was measured on a per-passenger basis, the result for 2021 was $30.88 per passenger up from $25.71, a 20.1% increase. This shows passengers may be flying less, but spending more.
Changes to increase conversion
Airlines have continued to optimise their ancillary products to drive conversion, and accommodate changing customer needs and behaviours, following two years of very little travel. Some expanded product offerings include large carry-on fees, extra legroom zones, subscription-based benefits, price freeze, and prepaid change flexibility.
To see a complete breakdown of 75 airlines’ ancillary revenue performance in 2021, insights into how to better optimise products to increase conversion, changes that airlines have made or are planning to make to their products and much more, download
It is widely known that during 2020, ancillary revenues played a key role for airlines whilst planes were grounded and ticket sales paused. This study highlights the continued importance of ancillary revenues to airlines as we return to normal, shedding light on one of the key channels of revenue within the industry.
Defining ancillary revenue as, “revenue beyond the sale of tickets that is generated by direct sales to passengers, or indirectly as a part of the travel experience,” the yearbook looks at a collection of 75 airlines including the world’s “most prolific users of ancillary revenue.”
The study compares the 2021 data to the pre-pandemic 2019 data as the 2020 results are overly affected by the pandemic and therefore are not as useful for producing a comparison.
Results showing the top ten high-performing carriers based on ancillary revenue as a per cent of total revenue were as follows:
Wizz Air 56.0%
Frontier 54.9%
Spirit 54.3%
Allegiant 51.3%
Viva Aerobus 44.8%
Ryanair Group 44.7%
Volaris 42.9%
GOL 33.0%
easyJet 31.4%
Pegasus 30.8%
Wizz Air had multiple ancillary revenue activities including airport check-in options, airport transfers and parking, assigned seating, “sitting together” fee, auto check-in, on board food and beverage, fare lock, fast track security, and on time arrival guarantee to name only a few.
At the Future Travel Experience EMEA event in Dublin, Robert Carey Wizz Air President discussed how the airline became the number one for ancillary revenues. Carey highlighted partnerships between airports and airlines, as one of the most important ways to extend opportunities and “interact with customers in new ways to grow business for all parties.”
The results of CarTrawler’s Yearbook highlighted the importance of ancillary revenue to airlines’ revenue in 2021. This year’s World Aviation Festival will feature an ancillary panel, an interview with Eddie Wilson from Ryanair DAC regarding the “future of market share, competition, digital transformation and ancillaries at Ryanair,” as well as a presentation by CarTrawler CEO Cormac Barry on “maximising ancillary revenue through technology and innovation.” Robert Carey, Wizz Air will also be speaking on “what is the next step in Wizz Air’s ambitious expansion strategy and how can it maintain that growth while still meeting big sustainability targets?”
The Third Horizon of Opportunity – High-Performance Retailing
The event season is a great time of year to lift our heads from the busy day-to-day and look at what is on the horizon, at the trends shaping the airline industry. The funny thing about horizons is that you never really get there, but it’s where new eras dawn. Accelya’s Tye Radcliffe, SVP of Product Strategy for the Order group, gives his perspective on the market as the industry emerges into the third horizon of value. Tye will be talking to people about this topic while ‘on the circuit’ over the coming weeks. So, what does it mean?
The first horizon
The first horizon was operational – getting passengers from A to B. The industry depended heavily on big, monolithic mainframes that enabled just that – and very successfully. Then the internet arrived. Airlines began investing in their digital direct storefronts so customers could start making bookings from their computers. Customers began to want and expect more. Plus, airlines wanted to be more innovative and directly service the needs of their customers! It was a frustrating time for many.
The second horizon
Airline frustration with the status quo made way for the second horizon characterized by airline-controlled distribution with NDC – and the freedom to create offers. The industry’s new rally cry was one of ‘retailing!’. Airlines would use data and rules to tailor core offers, ancillaries, and bundles. The offers would be made according to the customer’s wants and what’s right for the airline business – at that time.
The third horizon
Replacing monolithic with modular, and embracing ONE Order and science rather than rules, brings us into the third horizon of high-performance retailing.
ONE Order collapses data into a single order record. People or technology can access the data anywhere across the retailing and travel experience. This new accessibility makes way for a seamless interdependence between offer creation, order management, payment, fulfilment, and settlement. If an element in the experience changes, voluntarily or otherwise, a high-performance retailing platform adapts as a result. For example, suppose someone’s interline flight segment is cancelled while they are at the airport. Data science models and flexible, best-of-breed retailing technology could step in to power a better experience. Ancillary purchases could be automatically rolled into a new flight option. The customer could be offered half-price lounge access from a third-party provider to compensate for their wait. This offer could be made at any touchpoint from airport operations crew to a message to their phone in real-time. All this would happen without disruption to downstream processes such as accounting and revenue integrity.
The interdependence of best-of-breed retailing components, acting in unison according to changes in the retailing or travel experience, would create a perpetual motion of value to customers, the airline, and its partners. That is high-performance retailing.
This scenario may be on the near-term horizon for innovators and visionaries. But if your airline is not there now, how can you prepare for high-performance today? Think A to F.
A to F
A – Accounting and Finance: Prepare downstream processes for retailing
B – Bundles and Ancillaries: Introduce dynamic retailing of products such as premium seats, meals, WIFI, lounge access, and bundles
C – Core Offers: Add more agility to your revenue management processes by using more data sources such as competitor data
D – Distribution: Control your channels with NDC and encourage channel adoption with distinctive offers
E – Enrich: As you get more sophisticated, consider enriching your retailing strategies with data science to finetune offer creation and optimization
F – Freedom: Break free from legacy constraints by swapping monolithic with modular and embracing best-of-breed.
If this topic interests you, join me at the World Aviation Festival for my roundtable on October 5 at 11.20 am.
Article by Tye Radcliff, SVP Product Strategy (Order Group)
If you would like some fresh thinking about airline retailing, then check out Accelya’s Air Transformation Lab. This is where we ask a fundamental question: when it comes to the path to distribution freedom and high-performance retailing, where is your airline on this route? Join us on this exploration into airline retailing from various vantage points to inspire your journey ahead.
AirAsia Introduce ‘airasia Holidays’ to Their Super App
This month, the airasia Super App introduced ‘airasia holidays.’ Adding to the Super App’s brand as the ultimate one-stop-shop, users in Malaysia and the Philippines will now be able to customise their entire holiday itinerary. This will include adding flights and hotel bookings to create one cohesive holiday bundle without ever leaving the app.
The CEO of airasia Super App, Amanda Woo said:
“airasia holidays offers our app users a more robust, holistic and convenient booking experience with our capabilities as an airline and in hotel inventory management. With over 50 million active users in our database, we have a unique capability to offer personalised suggestions of holiday activities, flights, and hotels suited for each traveller, all through one convenient platform.”
The Super App will now allow users to book holidays in four simple steps:
Select ‘Holidays’ on the airasia Super App
Select the activity
Add flights and pick from the hotel options
Confirm the booking
The entire booking will be condensed into one payment which can be paid for through the app. Additionally, once the holiday begins, users can use the Super App as a hub through which to check-in for flights and demonstrate booking confirmations to both the hotel and activity provider.
The Super App will enable all of the above to be booked with low prices, expanding their repertoire as an all-in-one low-cost platform. Additional benefits include shopping for duty-free products, flight updates, check-in reminders, exclusive promotions, and the ability to connect with other travellers.
All in-app purchases including flights, hotel stays, airasia ride, and airasia food earns users points which can be used against future purchases, rewarding customers for their loyalty with discounted flights and bookings.
Currently, airasia holiday users will select their flights from bundles with AirAsia. However, Woo has revealed the Super App are “working on enabling airasia holiday customers to select flights from other airlines too, effectively pushing the limits of the holiday destinations they wish to explore.” Although initially commencing in Malaysia and the Philippines, airasia holidays will eventually be rolled out to other markets.
AirAsia created the airline industry’s first super app. The app was developed during the pandemic, offering the budget airline an alternative revenue stream. Building on a vision to become the leading digital travel and lifestyle platform in Asean, the app initially incorporated food delivery, e-commerce, and e-hailing arms. As travel reopened users could book flights on over 700 global carriers and stay with over 700,000 hotels globally. The app is currently working with in strategic collaboration with Google Cloud to develop their access. They are also working with tech companies to develop their biometric ID, chatbots, e-wallets, and more.
The Super App, boasting over ten million monthly active users in the second quarter of 2022, is a prime example of customer focused business, enhancing their experience through convenience and rewards for loyalty.
At this year’s World Aviation Festival, AirAsia’s Keynote will discuss the question, “How is the AirAsia ecosystem, including AirAsia Money and the airasia Super App creating more value and opportunity for customers than ever?”
