How does a Load Less, Sell More Strategy Impact Airline Profitability?

How does a Load Less, Sell More Strategy Impact Airline Profitability?

In our mission to revolutionise airline retail strategies, we champion the widespread adoption of our “Load Less, Sell More” approach, backed by compelling rationale.

Around 75% of airline revenue is generated from passengers while most of the remaining 25% of revenue is from air freight delivery. With passenger earnings greater for domestic than international travel, applying a load less, sell more factor is particularly relevant to domestic flights.

The end-of-2023’s insights from the Financial Times emphasise a robust growth forecast for middle Eastern airlines, expected to reach 115% of pre-pandemic capacity by 2025 – an outperformance compared to other regions. All whilst regional profitability is forecast at $9.41 net profit per passenger during the year, aligning with the US and notably surpassing European carriers by more than double.

While these achievements are commendable, the pressing question emerges: Why settle for the status quo when there’s potential for substantial improvement?

Here’s the encouraging news: Our call to action for airlines is to aim for a significant increase in profitability, possibly doubling or even tripling their net profit per passenger. Achieving such ambitious goals requires the implementation of advanced inventory optimisation strategies. This not only enhances profitability but also unlocks substantial cost savings in stock intake, setting the stage to change expectations.

Quite Simply, Don’t Fly What You Don’t Expect to Sell

Passengers are clearly the life blood of aviation, and it’s essential to create empowered passengers by providing them the intuitive applications to pre-order, define their preferences, manage allergy requirements, whilst delivering relevant personalised offers to them throughout their journey.

Retail and tourism are growth industries for many countries, connecting international communities, opening many opportunities for social and economic improvement, and this is something which we can help do responsibly through the right product, right flight, right passenger approach.

The key takeaway is don’t fly what you don’t sell. Deploy solutions that optimise conversion rates through dynamic bar-sets, freeing the crew from administering unwanted product, allowing them more time to deliver a tailored passenger experience, and not burning fuel on unsold products.

The implementation of a load less, sell more strategy drastically cuts unsold inventory. Our ClarityIFR (In-flight Retail) solution brings forth immediate benefits to a single airline, increasing inflight retail conversion rates on average by over 30%, totalling to a £22 million increase in sales per year. But what exactly does this strategy entail?

The Power of Pre-Ordering

Pre-ordering delivers a world of convenience. The strategic move of pre-ordering onboard catering and duty-free items emerges as a modernised force for the industry. Encouraging passengers to engage will reduce waste and elevate overall passenger satisfaction. Pre-ordering delivers great expectations, providing a wealth of data on meal preferences and trends, ensuring airlines are catering to modern travellers’ desire for control.

This practice not only meets evolving customer expectations but also enhances operational efficiency, accurately provisioning items, minimising onboard stock, and supporting service delivery. The integration of technology, including a point-of-sale app, not only amplifies passenger experiences, but also facilitates communication along the supply-chain, the airline, and the crew, ensuring timely preparation for all flights.

In essence, pre-ordering puts passengers in control, contributes to accurate inventory management, and shapes a future where air travel seamlessly integrates technology, personalisation, and sustainability for the benefit of both airlines and passengers.

AI Mentality Mastering Profitable Growth

Airlines, now adopting an AI-centric mentality, proactively identify opportunities for positive interventions throughout the customer journey, turning potentially poor experiences into delightful ones – a game changer. The result is a synchronised and aligned response that resonates with passengers.

AI is becoming a circuit breaker for aviation. Global AI adoption in the aviation market is expected to increase in value from $152.4 million in 2018 to an estimated $2,222.5 million by 2025. As this continues to reshape the industry, AI plays a prioritised role in airlines’ efforts to reduce future emissions and achieve sustainability goals amid rapid technological advances.

Airlines leveraging AI effectively are poised to ensure a sustainable future. This not only involves customer retention strategies but also extends predictive analytics. For example, AI-driven predictive analytics enables warehouse management teams to optimise packing quantities, minimising stock waste and ensuring efficient inventory management. By accurately predicting sales and understanding the demographics of customers and flight destinations, airlines can tailor onboard offerings, increasing the likelihood of inflight sales.

Flying high with an integrated view of data

Data integration stands as more than just a buzzword; it is the linchpin that has the potential to revolutionise airline operations. By harmonising data from diverse sources, including weather conditions, air traffic performance, and passenger preferences, airlines can gain a comprehensive view of their operations. This integrated perspective enables them to optimise flight routes, reduce excess inventory, enhance fuel efficiency, and improve overall sustainability.

The aviation sector is gradually recognising that achieving end-to-end data integration is key to unlocking a future of greater efficiency, reduced waste, and informed decision-making.

Mastering customer expectations becomes a reality through improved communication and personalised strategies, enabling efficient problem-solving and delivering greater convenience.

Automation becomes a key ally as organisations can streamline processes and minimise manual tasks associated with manual processes, such as human errors and increased expenses. Automated data integration becomes the catalyst for cost reductions and heightened operational efficiency.

Data integration emerges as a driving force for innovation, guiding organisations towards new opportunities and advancements. It elevates the quality and accessibility of data, ensuring that accurate and comprehensive information is readily available for analysis through reports, dashboards, and visualisations. The consolidation of data from multiple sources simplifies the uncovering of valuable insights, trends, and patterns. Moreover, the accessibility of this information fuels informed decision-making, forming the basis for collaborative discussions across departments.

The Bottom Line

Knowing how many items are sold, how much stock intake is left after the flight helps provide insight into how well the airlines are doing in marketing effectiveness, seasonal trends, efficiency, revenues, and profit. Though, understanding the bottom line is not just about selling, it’s about embracing a digital-retail mindset.

ClarityIFR’s data-driven methodology goes beyond traditional metrics, enabling the fine-tuning of tailored offers for each flight. This precision ensures accurate deliveries to the right customers, at the right time, underscoring the significance of adopting our ‘Load Less, Sell More’ approach. This strategic approach not only minimises significant wastage but also amplifies overall performance, emphasising the pivotal role of a digital-retail mindset in aviation success.