Airline technologies and traditional sales strategies that have served the industry well for many years may not be as successful in their future growth ambitions. According to McKinsey, airline retailing payments optimization, could be worth up to $40 billion more by 2030.
Increasing ancillary revenue is crucial for airlines to boost profitability and enhance customer satisfaction. Ancillary revenue includes income from sources other than ticket sales, such as baggage fees, in-flight services, seat selection, and loyalty programs.
One effective strategy is to personalize offers through data analytics. By analysing customer data, airlines can tailor ancillary products to individual preferences, leading to higher uptake rates. For example, frequent business travellers might be offered lounge access or priority boarding, while families could be targeted with in-flight entertainment packages, in-flight snacks and extra baggage allowances.
With onboard 5G arriving over the next few years, this will open up a range of in-flight services, previously dependant on ‘offline’ payments and in-flight entertainment providers.
Additionally, airlines can expand their product offerings. Partnering with hotels, car rental companies, and travel insurance providers allows airlines to offer comprehensive travel packages. This not only increases revenue but also enhances the overall customer experience by providing convenience.
Implementing dynamic pricing for ancillary services can also boost revenue. Adjusting prices based on demand, seasonality, and customer profiles ensures optimal pricing, maximizing revenue potential. Also, enhancing the in-flight experience through premium services such as Wi-Fi, gourmet meals, and seat upgrades can attract more customers willing to pay extra for added comfort.
Airlines should invest in user-friendly digital platforms, enabling seamless booking and upselling of ancillary services. A smooth, integrated booking process encourages customers to purchase additional services, thereby increasing ancillary revenue.
Data Clarity’s complete end-to-end inflight retail system can support all of the above, and more.