I got the idea for this post after seeing a press release from Navitaire on re-signing Virgin Blue. The news that they were going down this path has been widely known for months, but I assume the delay on the press release is that the contract was probably only recently finalized.
Virgin Blue plans to use the New Skies platform to help:
- Boost profitability and revenue with flexible ancillary service offerings for car-hire, travel insurance and other functions, all integrated directly into the booking flows;
- Expand revenue-generating inter-airline and code-share services by aligning with an extensive network of airlines partners;
- Create new product and market offerings to reach high-yield and leisure travelers by incorporating customer-centric data throughout the entire guest lifecycle;
- Provide comprehensive day-of-departure passenger services through advanced guest recognition capabilities; and
- Optimize the combination of seat revenue and guest satisfaction by offering New Skies’ proprietary ‘Intelligent Seating’ capabilities.
Almost all the points above are quite interesting for me, most of all the first point; but this post is not intended to be about Virgin Blue, rather it is on the general topic of selling products generating ancillary revenue in the online air ticket booking flow or at some other point in time. I actually plan to refer to Delta more than Virgin Blue on this point, but before I leave Navitaire completely, I refer back to another airline that recently decided to move away from the Navitaire system. In the words of David Barger from JetBlue on the reason for the switch: “The ability to as we take a look at the booking flow through the website and the ability to monetize the booking flow… So we just think this is prudent for this time because it really, we think, optimizes our revenue opportunities.” Obviously far from a cut and dry argument, as different airlines seem to see the merits of Navitaire very differently.
I originally held the view that the airline website’s primary objective was to sell air tickets, and that trying to sell any other products in the flow prior to ticket purchase was to risk distracting customers and losing sales. So the sale of ancillaries was best done after ticket purchase. This model was generally referred to as Flights Plus – with dynamic packaging at the opposite end of the scale, and selling ancillaries during the booking flow falling somewhere in between the two.
Insurance was the first crack in the pure flights plus model, as unquestionably the best place to sell this product is prior to payment of the air segment. The raft of a la carte fees like pre-paid checked baggage that have cropped up recently also clearly deserve to be sold during the booking flow. But the jury is still out on hotels, cars, destination content and the like.
EasyJet were one of the first cariers I saw integrating hotels into the booking flow, and it was quite well done at launch as there were a very limited number of hotels offered; so minimal chance for user distraction that could lead to them abandoning the session. As a point of contrast, I was recently on Delta.com looking at flights from Madrid to New York. I’ve given the Delta website high praise in the past, but unfortunately today I’m singing from a different songbook. Firstly, I don’t understand why the prices shown on the page shown here are not in the point of sale currency, and also why taxes aren’t included. The explanatory text says fares shown in billing address currency will appear later, but whether it is eventually billing address or point of sale currency, USD minus taxes is of minimal use in deciding whether or not to move to the next screen at this point in the flow. Secondly, and a much lesser point, I’m not sure why the terms and conditions for ancillary products not even available for purchase on this page need to appear at this point – it is just another confusing link to distract the consumer from their intended purchase of the air segment.
But the real reason for this post was about whether to put ancillary revenue generating products into the booking flow. On the right is one example of why this can be fraught with danger. At this point I have selected some flights to New York but not added customer details or paid anything. Admittedly I had to click an optional second time to see more destination content and get to this ugly UI screen capture I’ve shown here; most potential purchasers wouldn’t go this deep. But to even give me the option, and thereby give me the real risk risk of a session timing out because screens and screens of new data appeared (without even having the date pre-selected to my date of arrival) in order to try and sell me small value items whilst risking the air segment sale is something unfathomable.
I know a lot of suppliers to the airline industry read this blog, and the questions I am raising are much more about integration than the quality of the ancillary products platform itself, in this case iseatz. This company is currently getting some decent publicity for their platform, but I have mentioned them once before in relation to poor integration; presumably an area of responsibility of their airline customers. This is no different to companies like isango or Unaira who have a good product, but where the failings are more often than not to be found in the website integration and the overall selling approach taken by the airline, rather than any weaknesses in the product itself. Not that the suppliers get off completely, as claiming expertise in ancillary revenue means there is an obligation to push airlines to adopt best practice and then everyone wins – I myself have stood in the corner of third party vendors in this type of discussion with airlines on numerous occassions, and chances are I will be doing likewise even more frequently in future as optimization of ancillary revenue becomes an even hotter topic in the airline industry.
So the verdict from today’s post is this: There are no hard and fast rules about how much ancillary revenue you should generate during the online booking flow, but if the way you have chosen to integrate it online means there is ever a risk of losing the air sale, then the answer is clearly don’t do it!