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Archive for the ‘Airline Merchandising’ Category

 

In my last post, I told you how technology is changing your conversations with hyper-connected customers. I also promised to tell you what your biggest asset is.

You might think your biggest asset is your airplanes, or your people, or your newest business class seats. But no, the most vital asset that any of us in the airline industry have in our relationship with customers is “The Offer.” Without the right offer, nobody buys and nobody stays loyal. Without the right offer, you lose the relationship and the revenue.

The offer is what flows from you to your customer throughout this conversation and this relationship. The offer is truly your biggest and most important asset.

The concept of an offer is not new, of course. Offers have always existed. But in the past, an offer was a price on a product or service, and everybody who came to shop in your store – or even your website – generally saw the same prices or close to the same prices as your competitors.

Today, the offer is complex. In fact, its every bit as complex as the customer relationship you are in now. Every offer needs to be personalized and optimized – created specifically for a specific situation, person, product, and service. In other words, every offer is unique; just like people are unique in their own ways; just like every customer you have is unique. You could even say the offer has its own anatomy, or DNA. Every offer is unique and created dynamically in real time.

Think about it this way. Every single time you interact with your customer, a new strand of DNA – a new offer – is created. And what goes into the manufacturing of this offer? A lot!

We’re talking about Merchandising, Dynamic Pricing, and Predictive Analytics. We’re talking about loads and loads of data! There’s customer data – things like demographics, shopping and buying history, and loyalty. There’s data about your products and services. What’s the aircraft or the load factor on the flight, and how many premium seats are left? These might impact what you offer and for how much. There’s also data that comes from Predictive Analytics. What is this traveler’s propensity to buy this particular product?

All of this data is assembled and analyzed, and an impactful offer is dynamically calculated in real time. Hopefully, this unique offer delights the traveler and makes you some money in the process. This is the future of Revenue Management, and it’s the holy grail for the world’s leading airlines.

And guess what? Nobody except you – as the supplier with access to all of this data and intelligence – can ever create an offer this good or this impactful. You can’t outsource this to a third party or a GDS, or even a PSS – because they don’t have all the data! They are not in this specific, hyper-connected relationship. It’s you, and only you, creating your offer – your biggest asset. Think about it!

Of course, you can also request an invitation to attend our exclusive event dedicated to technology for airline-controlled offers in Miami, Florida, April 5-6, 2017. Visit farelogixoffersymposium2017.com/ for more information.

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“The Offer” is now the airline’s biggest asset.

Sound silly? Hard to believe? I mean come on… airline’s biggest asset…it must be the people, right? Or the fleet of new airplanes? Or maybe those fancy remodeled lounges…. Oh wait, no, the biggest asset must be that new seating configuration or the stand-up bar in the back of the plane. Right? Wrong. All of those things are important…but they are not the airline’s biggest asset when it comes to competitive advantage and earning More Revenue and Happy Customers.

No, the airline’s biggest asset is, without a doubt, the offer it makes to potential customers literally millions of times per day through its various sales channels. Because at the end of the day, if potential customers don’t turn into real live customers, all those other “hard” assets mentioned above become extremely burdensome for any airline. The airline’s ability to monetize those assets essentially comes down to the offer it makes to its potential customers via its web site, call center, mobile app, corporate booking tool, or travel agency, including OTAs and meta search.

Yet, most airlines today put the creation of their offer – and control of their biggest asset – in the hands of strangers! Bizarre, isn’t it? OK, maybe 3rd parties like the PSS and GDS are not strangers, but it’s safe to say the offer is not their biggest asset…and that those companies cannot possibly understand what is the best offer creation methodology for you, the airline. Worse yet, some of these 3rd parties may not even have your best interests at heart when it comes to what drives their business model.

So, what to do if you are an airline seeking to take greater care of, and invest in, your biggest asset? First off, Ask the Question. Then take action! By action, I mean grab back control of your ability to Create, Control, and Deliver your offer to your sales channels – using technology that is fully scalable and under YOUR control. In other words, become the “Single Source of Truth” and don’t look back!

 More on how to do that coming up.

Last month, Farelogix hosted its Merchandising Master Class as part of Airline Information’s (AI) Mega Event in Barcelona, Spain. Farelogix representatives brought together industry thought leaders, top airline performers, and technology solution providers to discuss merchandising with the standing-room-only crowd. These Master Class events, which have become a staple of AI’s Mega Event series, have been conducted all over the world – from Singapore to New Orleans.

Recognizing that designing and implementing an effective airline merchandising program requires innovation on many levels, the Barcelona workshop explored the entire end-to-end process with a focus on taking action – from strategy to execution. Real case studies and hands-on technology approaches were used to tackle the full spectrum of successful merchandising including: differentiating your product and brand; tips to create and optimize the best offer; and insights on New Distribution Capability (NDC) and related technologies that can help you get to market quickly with the highest flexibility, efficiency and revenue per passenger.

Jim Davidson, President of Farelogix, kicked off the event with his presentation: “Merchandising Call to Action: Are You Leaving $15 Per Passenger On The Table?” Read the rest of this entry »

An effective airline merchandising program showcases your brand, delights your customers, and grows both revenue and loyalty.  But effective airline merchandising is not easy to accomplish.  Embracing value-added services, personalization, and New Distribution Capability (NDC) requires innovation on many levels, from strategy to technology.

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We invite you to attend a one-of-a-kind master class, dedicated to exploring what it takes to successfully grow happy customers and more revenue through effective merchandising and value-added services.

At Merchandising and NDC: The Path to Happy Customers and More Revenue, we will tackle the full, end-to-end process of merchandising and personalization, including how to differentiate your product and brand, creating and optimizing the best offer, leveraging NDC, and understanding what technologies can help your airline stand apart while increasing revenue per passenger. Read the rest of this entry »

What? Seriously? Am I going to start bucking the conventional wisdom of an airline fare already? Slow down… we are all just fresh off IATA NDC-a-palooza in San Diego where everyone and their aunt was testifying to how ready they are for NDC.

So with the NDC Acceptance Position now a badge of honor (or of courage, for us early supporters), you bet I am taking on the concept of a “fare” because not only is the airline industry no longer just about “fares and schedules,” the very nature and concept of an “airline fare” is now in question.

Ok, I’ll be gentle and do my best to be brief because it may take a bit of time for this to sink in…at least it did for me, but when it did, boy, did the light bulb go off!

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This new way of thinking is about creating truly dynamic bundles containing what we would traditionally know as a “fare” along with certain ancillaries, where the “fare” is treated as a “service item” within the actual bundle, similar to the ancillaries themselves.  Read the rest of this entry »

At Farelogix, we consider ourselves a disruptive force in airline distribution technology. We innovate. We push the envelope. We challenge ourselves. And because of all that, we produce some cutting-edge technology. Yet I still find myself in meetings with clients and at conferences asking, “How can this be?” Or, “How can an airline still be pigeon-holed like this?” Of course I’m not going to name names, but I think it is important for you to hear the stories and maybe, like me, you’ll be mad as hell and not willing to take it anymore!

© hxdyl - Fotolia.com

© hxdyl – Fotolia.com

For example, a couple of months back we were meeting with an airline to discuss merchandising. We love merchandising. We, along with the rest of the industry, now know for a fact that airline merchandising leads to better customer happiness and more revenue for the airlines. Plus, (shameless plug) we have awesome merchandising technology. So, needless to say, we were psyched for the meeting and it went really well. We showed them some really cool stuff around pricing seats, and even other cool stuff like dynamically pricing the seats and seat-location bundles, and since we already had a direct connect with this airline, we showed all this working in their system – no gimmicks or hocus pocus. Not exaggerating, it took us less than an hour to create these real examples, built right there in the conference room, and they were wowed.

During the demo we heard a pain-point from the airline. I don’t recall if it was because they were introducing new seat configurations or what, but basically they wanted to change the prices on some seats. It wasn’t even complicated stuff like dynamic seats based on city pair, length of flight, peak travel time, or anything like that. They told us their IT provider told them the request to change the price on a few seats would cost over half-a-million dollars and take up to six months. Six months! We had literally just shown them how they could do it in under an hour. Yet this is what airlines are still putting up with! It doesn’t have to be like this!

Imagine if I were selling a pair of shoes on eBay, and I wanted to change the price from $25 to $20. But instead of just being able to login to eBay and change the price, I had to write eBay, and they would write me back in a month or so to tell me they could change the price on the shoes I was selling but it’d take a month and cost $10,000. I know it sounds ridiculous, but this is the world so many airlines still live in. It’s absolute madness!

So, airlines, the next time your IT provider, or even your in-house IT folks, quote you some seemingly astronomical price or time frame for a merchandising-related implementation, tell them, “Hang on, I’ve got to Ask The Question!” Then call us. Chances are if we are not too busy, we could show your use case actually working in a real airline test system in a day or so.

Remember time is money, and the longer you wait the more money you are losing.

We recently had the opportunity, along with consulting firm L.E.K., to share our thoughts and insight on ancillary services and airline merchandising in a feature in IATA’s Airlines International magazine. Here’s a brief excerpt:

Ancillaries are not only a boon to airline economics but also an opportunity to enhance the customer experience and airline brand loyalty. Meeting the customer’s demand for greater choice, convenience, and value is the new competitive playing field. The key to meeting this demand is intelligent use of data—from customer demographics and trip purpose, to buying history, real-time trip conditions, and even revenue-managed inventory—to create the most relevant offer, and then deliver it no matter where the traveler happens to be shopping or browsing, even in-flight. Intelligent merchandising is, put simply, engaging with your customer, and acknowledging their specific needs.

You can read the article in its entirety, courtesy of Airlines International, here.

As the proliferation of airline ancillary sales advances, selling in the travel agency channel continues to stand as the last bastion. Airline websites have long been capable of selling these value-based products and services, and airlines are making considerable headway at selling via kiosks, mobile apps, and call centers. Yet trying to sell these same services through the agency channel continues to be problematic (one only has to think of AA’s fare families being marketed and sold by either an odd or even number).

© Maksym Yemelyanov - Fotolia.com

© Maksym Yemelyanov – Fotolia.com

With advancements in distribution communications (especially now that NDC has DOT’s blessing), sending and receiving ancillary product and service information to/from the agency channel is less a technical problem, and more an issue of change management. The technical problem of displaying and transacting those ancillaries is one that companies like Travelport—with their investment in the travel agency desktop—are quickly working to solve. But what about that pesky change management issue?

One must not underestimate the foundational challenge facing the travel agency community.  The reality is that with NDC finally getting the okay, more and more airlines will adopt this distribution methodology of delivering their content – in real time – directly via their API to the GDS who in turn will aggregate it and deliver it to the agent desktop.  Read the rest of this entry »

© RTimages - Fotolia.com

© RTimages – Fotolia.com

After going over the top 10 reasons for not starting an airline merchandising program in a previous post, we thought it might be good to provide a little encouragement, along with what we believe are foundational principles necessary for any airline wanting to start or enhance a merchandising program.  Because let us not forget that in a relatively short few years, those airlines already practicing the art of airline merchandising are reaping their slices of a new revenue pie that is expected to exceed $50,000,000,000 (yes, that’s billion) this year, almost exclusively attributable to airline merchandising.  This year it is projected the average revenue generated per passenger boarded (PB) from what I call “true ancillaries” (those optional purchases excluding bag fees, change fees, and affinity credit card revenues) will exceed $7.50.  That’s more than most airlines make on a ticket sale!

So if you are thinking of starting a merchandising program, or expanding the one you currently have, here are a few considerations we have picked up on over the past couple of years talking with airlines about merchandising.  Our top three considerations are*: Read the rest of this entry »

© md3d - Fotolia.com

© md3d – Fotolia.com

We’re excited to kick off the first installment of our blog series on airline merchandising with,  “Top 10 Reasons Not to Get Started with Airline Merchandising.” We’ll share with you some of reasons we’ve heard why airlines don’t want to or are not ready to start merchandising. We’ll also share our rebuttal to those reasons. Enjoy!

10. We are a full service airline.  We offer an all-inclusive product. 
Are you able to tell the world that and demonstrate to customers your brand differentiation?  When travellers shop for a flight online, can they tell the difference between you and your LCC competitor? Merchandising isn’t just selling products and services; it’s differentiating your product so consumers know what they get when they choose your airline.

9.   Our customers aren’t asking for these products and services. 
Well, they’re asking someone for them, otherwise they wouldn’t be spending over $50 billion on those services this year.

Read the rest of this entry »