Delta Air Lines sees an annual $1 billion revenue opportunity in ancillary services such as Economy Comfort seats and Sky Priority services, and the carrier wants to become less pushy about fees.
That's the direction of Delta's merchandising strategy, as outlined [audio webcast] today by its president, Edward Bastian, at the Bank of America Merrill Lynch Global Transportation Conference.
"Our merchandising strategy within Delta needs to evolve from what I would call a push approach where we force fees in a one size fits all on our customer base to more of a pull strategy where we give customers the opportunity to purchase what they value," Bastian said. "We see this as a $1 billion opportunity which should be up and running, all-in, by 2013."
So, Delta sees less force-feeding of fees, and more Comfort Seats, Wi-Fi and SkyClub passes in its future. But, where the balance lies, remains to be seen.
This is an important transformation by a U.S. major carrier, which has been a leader in charging for bag fees and the like. A transition to fees that truly are optional could go a long way toward easing consumer angst over the airlines' fee-frenzy.
Bastian said technology execution and a new ecommerce platform, which will be fully rolled out over the next 18 months, will be key to hitting the $1 billion target.
Even in 2011, new revenue streams for Delta are expected to deliver $150 million to $200 million in incremental revenue, the airline says.
In fact, the recently launched Economy Comfort seats have been reaping about $500,000 in incremental revenue per day, Bastian said.
Delta has been introducing all kinds of new ecommerce products, from a Facebook booking engine and Facebook check-ins to baggage tracking.
The product rollouts have been a factor in Delta.com now accounting for 40% of the airline's bookings in North America.
Bastian said Delta.com is the airline's lowest-cost channel.