There has been much rhetoric recently about how to offer ancillary services to consumers, what services to offer and when, that it raises the question whether consumers want all these additional/complementary elements.
Many travellers will tell you they just want a comfortable seat at a reasonable price and to arrive on time.
Tnooz put these questions (and some others) to SAS vice president of global digital sales, Christina Ericsson, for an airline perspective.
One of the basic issues is whether to go down the shopping basket route like many ecommerce companies or remain true to the traditional airline way of doing things.
Whatever it decides, SAS is already looking at the various products and services it could provide and plans launches throughout this year on what Ericsson calls the basics as well as the potential for new revenue streams via non-flight related products – eg things that support the customer such as a belt consumers don’t have to remove at security.
So, what’s the Holy Grail when it comes to ancillaries?
With the pressure airlines are under in terms of yield, the basic need according to Ericsson, is to be able to offer something else and earn more revenue.
"The Holy Grail is also to try to discover what the customer wants."
Do customers want all these unbundled services?
"Sometimes what people say is not necessarily what they want and I’ve seen that. We have the bundled service, we have two ticket types and we’re sticking with the all-inclusive ticket but we’re looking at competitors doing it the other way round and earning a lot of money. It’s (bundled) hassle free but maybe customers don’t want to pay for things they are not going to use."
When it comes to ancillaries, what are the biggest challenges?
From the technology side, it's about how to sell these additional services - one-stop shop or some other way and whether it's seamless with all services offered via all channels or whether the airline targets certain services to certain devices e.g offering lounges on mobile.
"Customers are so far ahead in terms of maturity and we need to get there. The other thing is the bundled thing, if we are going to do attached services, the communication around it has to be very clear.
"We also need to discover what sort of product we are going for and we need to be a little more agile, it's a trial and error process and we need to be that flexible to look into what the customers want."
Ericsson spoke to Tnooz during the Amadeus Airline e-Commerce and Mobile conference in Madrid earlier this month.
Also interesting to note some audience poll results on the topic during the event:
Besides bags and seats, which of the following ancillary products have the most online revenue growth potential in the next 12 to 24 months?
- Product options such as upgrades and 'time to think' where the consumer buys a little extra time to hold the ticket before purchase (a concept Amadeus is exploring) 44.9%
- On-board services 18.7%
- Airport services 16.6%
- Other third party content 13.9%
- Additional frequent flier miles 5.9%
When is the ideal time to offer ancillary products and services?
NB: See-Saw image
- Some time between booking completion and the trip 30.9%
- After shopping choices but before booking 24.6%
- Just after booking 20.9%
- As part of the flight/hotel booking 18.9%
- As you leave for the trip or checking in 4.7%
NB2: Disclosure - author was a guest of Amadeus which supplied accommodation/travel for the event.