Back in 2010, global airline ancillary sales reached $22.6 billion. Today, that figure has more than quadrupled, reaching almost $93 billion by the end of 2018 – and these figures are set to keep on rising. For many low cost carriers, ancillary sales make up a serious portion of their revenues, with America’s Spirit Airlines as the leader, earning 46.4% of its revenue from this one channel.
Ancillary sales are big business, but outside of the industry leaders, many airlines are still offering a fairly limited set of options to customers. It’s long been standard to offer things like:
However, the data clearly shows that passengers are open to more ancillary sales if they’re presented correctly. Let’s look at five smart ways airlines can maximise their ancillary sales.
The first step in boosting ancillary sales is for your airline to develop a clear vision and strategy – take inspiration from Irish carrier Ryanair who say they want to be the ‘Amazon of travel’. So, what would an airline ancillary sales strategy look like?
Once you have a target and a vision, you’re then ready to plan your journey to boosting ancillary sales.
The most successful ancillary sales are those that meet the needs and desires of different passengers. And, the only way to achieve this is to really get to know who your customers are and what they want. This is about more than differentiating between Economy, Business and First Class passengers. Instead, it’s about using data to really slice and dice your passengers into segmented markets and give them specific offers.
For example, within your economy passenger list, there will be a great variation in kinds of passengers and motives for travel. For instance, some will be business travellers who will be interested in booking hotels in the destination city’s central business district. Others will be tourists who will be keen to see the sights and go on guided tours around the old town. The smart thing to do would be to provide these different passenger profiles with personalized deals related to their own motives for travelling – either by email, in your app or even in-flight. By providing more relevant products and services, it’s much more likely passengers will spend on ancillary offers.
To learn more, read our article on passenger profiling here.
Picture this scenario: you’re on a weekend break to a location on the Mediterranean and the weather forecast is for short, heavy showers on most days of your visit. Wouldn’t it be great if your airline offered a sale on umbrellas that let you buy on board and pick up on your way through arrivals?
This kind of real-time, contextual sale is increasingly possible with the latest customer interaction platforms. Airlines can respond to unforeseen events, such as delayed flights or changes in the weather, and push notifications and offers to their customers. By being smart and pro-active, airlines can boost ancillary sales by reacting to real time changes. This might include:
By being able to offer products through multiple ‘channels’ – be that your website, your app or through an on-board catalogue, you further increase opportunities for ancillary sales. For many airlines today, most on-board options, such as food, beverages, branded products and other luxury goods are only available to order in-flight. But what if these could be offered via multichannel options?
For instance, while a passenger is waiting in departures, they could receive a link to a digital version of your product catalogue or food menu via email or in the app. This gives them more time to browse and means they may decide to purchase something before even getting on the flight.
Or, consider how this might work with meals. Perhaps up to a day in advance passengers could be sent an offer for a luxury meal that might cost a few Euros more – with attractive photography, many customers might be convinced to take up the offer over standard in-flight fare.
A final method of boosting ancillary sales is for airlines to develop partnerships with companies beyond the standard hotel chains and car hire businesses. Think about location-specific partnerships tying into destinations.
Perhaps your airline flies to a family-holiday destination where there are various water parks. Why not sell tickets to those water parks in-flight? There are countless similar possibilities – from concert and theatre tickets to restaurant deals and more. By going beyond the ‘standard’ ancillary offers, your airline can tap into much richer seams of revenue.
Airline ancillary sales provide airlines with a dependable and fast-growing source of revenue. And, in an era of low-cost tickets and higher fuel prices, mastering ancillary sales will help innovative airlines boost profits.
Central to success in this area will be knowing your customers and providing them with relevant products and services – and smart use of data will be key to discovering what it is they actually want. To find out how Conztanz can support you on your journey to boosting ancillary sales, contact us today. Or, read more about ancillary sales here.