I may have taken a decent break from blogging and most things work related, but it’s good to see that news on innnovation and ancillary revenue in airline direct sales channels hasn’t slowed during this period. I’ve probably missed a lot of interesting stories recently during my hiatus but here are a few things I’ve seen, some of which I may follow up on in more depth in coming days.
The big OLTA’s in the US are all seeing declines in average daily rates for hotels. This is a global trend, and is relevant for any airline relying on a percentage of the hotel selling price to make their ancillary revenue budget this year. The OLTA’s might be putting on a brave face saying they hope the lower prices will cause an increase in nights sold, but for airlines relying on cross selling to flight customers it is crucial to look at the conversion rates as you are much more likely to be relying a more limited set of potential buyers. My recent holiday was actually interspersed with discussions with a few airlines on exactly how to achieve this, as the smart airlines are all focussed on increased conversion for ancillary revenue right now rather than just adding a wider range of under-performing products.
Viator announced a “completely redesigned and revitalized affiliate distribution platform.” I’ve worked with competitors to Viator (Isango and Unaira), plus I’ve got airline customers who use Viator, and I am big believer in this type of product. But the way it has been implemented to date by airlines is not doing the product justice and conversion rates are nowhere near where they should be. I’m working with one small carrier at the moment to remedy this, and hope to be in a position in coming months to be able to fully disclose the data on this. Ancillary revenue is not just for the big airlines, and any airline not giving this topic full attention is letting money slip through their fingers.
Iberia.com announced they have redesigned their website . The following image reads something like: A new form of buying in only 3 steps
- Flights according to price, time and flexibility
- Passenger information
- Buy or Reserve.
I haven’t had a proper look at the new booking flow, but congratulations to Javier Perez Rios and his team for continuing to push ahead in online innovation. One thing I am impressed with on their site is their implementation of affinity shopper, but I’ll probably revisit this topic in the future and write about it in more detail, as it warrants a post in it’s own right.
Spirit Airlines in the US now charges a lower fee to customers buying at the airport than those buying online. Apparently Allegiant is doing something similar. Charging fees for higher cost channels is understandable, and customers can probably accept it, but telling customers the lowest price is only available from a difficult to access higher cost channels could end up looking like a cynical way to advertise fares that most people will be unable to purchase. It will be interesting to see if this approach catches on elsewhere – I hope we are not going back to the bad old days of advertising fares exclusive of all the taxes and charges.
One observation from taking time off is that you talk to non airline people a lot more than usual – this can be quite enlightening, as too often we in the industry think that because we understand something related to flight, then the rest of the population must understand it equally as well; or they are stupid if they don’t. First example was talking to someone booking an around the world trip and she had been looking at the oneworld site and gave me some unprompted positive feedback – this was rewarding given that I sold the original solution to oneworld, although the real credit should go to the teams from Innovata and Amadeus who worked on the implementation. Second example was sitting next to a shopfitter from Melbourne on a Thai Airways flight in economy class. Here was a guy telling me work was really drying up due to the global financial crisis, so one would expect he might be more sensitive to saving a few dollars, but he was scathing of his past experience flying Air Asia X to Kuala Lumpur and was sworn off the LCC long haul model (obviously not his terminology) saying he would never do it again. One negative opinion will not make or break an airline, but it was interesting to hear nonetheless. I’ve since had a look at their website, and it is one of the less user friendly implementations of Navitaire I have seen. Then again, Ryanair probably don’t win any awards for website design, but it doesn’t stop them successfully selling millions of flights online.
Finally, I went through Bangkok airport twice in the past month, and was disappointed / frustrated both times with how long it takes to get past immigration, and also through the security checkpoint. I don’t want to step on the toes of my friend Tom Merkli and his Late Departure blog, but what is it about efficient queue management that they seem impossible to implement. Thai Airways is a good airline (apart from the fact that I can’t buy an infant ticket online), but BKK airport was a below par experience; luckily my frustration in BKK did not result in me reacting the same way as this woman who missed her flight from Hong Kong to San Francisco recently.