Innovation In Generating Ancillary Revenues
Large strides have been made in generating non-ticket revenues. Yet technological advances are making wider opportunities available. Not only new forms of distribution, but also using more straightforward methods such as incentivising staff and expanding the use of inflight wifi to generate totally new sources of income. A focus on enhancing customer experience rather than a reliance on unbundling also provides more attractive relationships.
Capturing more of the passengers’ travel wallet: Capturing more of the passengers’ travel wallet not only improves an airline’s own economics but makes it more relevant to the passenger and hence improves their stickiness/loyalty (e.g. premium passengers are not just looking to reduce their air spend but their entire travel spend so if if airlines can leverage their buying power with hoteliers and other suppliers and offer good value bundled travel packages to their passengers through their holidays brand)
Maximising ancillary revenues: Given ancillary revenues are typically not part of the initial purchase decision they are more resilient than air fares. But they must be merchandised (right offering to the right person at the right time and at the right price) rather than merely being passively offered.