Let’s face it – a seat is a seat is a seat. Or is it?
When you think about the motivation you have to choose one airline over another – in the past it was accepted that you would purchase a bundled product. Thus the sale of the final item required an assessment of a basket of features that came bundled with the ticket.
Fast forward to 2009 and the airlines have woken up to the fact that by unbundling their products they can make more money. Great for the airlines but what about John and Suzie Q Traveller? Is this necessarily a good thing for them. Actually I believe it is.
The airlines from time immemorial have always wanted to obfuscate the price of the ticket that you buy. Why else would they have such a complicated product. The spectrum of carrier product offerings is enormous. You have your bare bones product – yes it is technically possible to get a Ryanair ticket without paying for check in – but it sure is not easy. Or you can sit back and relax and buy a bundled product on BA and get everything included – and get a nasty shock when you find it isn’t. Frontier even lets you know the choice and powers its website with options that span the spectrum.
In 2010 as the airline emerge from their lethargy of recession based slumber to power ahead with new ways of differentiating their product you will be presented as a traveller with a wide (some might say wild) array of choice. In some cases it will be too much choice. If they do a good job people will be able to buy standardized products as bundles or pick and choose what they want. So much for the 3 click purchase model!
That the airlines will offer this wide array is not in doubt. How will the market adapt to it will be very interesting. Firstly let me just get my current pet philosophy out of the way. I absolutely believe that the legacy GDSs will fail dismally in providing tools to the intermediaries for the purchase of these differentiated products. Anyone who doesn’t believe this will be just road kill along the way. So the airlines and the smart intermediaries and companies who are going to provide the tools for this will start to distance themselves from the legacy environment of the traditional GDS based model. Compensation and use will fragment even further than it already is. If you don’t believe me – just take a peak at your current GDS contract and your airline contract and see if they match up!
Airlines will offer trade up options. Many airlines already do. For example United will allow you to purchase an upgrade to a better seat on just about any fare. The restriction of only purchasing at the point of airlines website or service delivery (e.g. Airports and on the Plane) will also fall and the user will be able to trade up and buy ancillaries at the point of sale – online or offline.
TMCs and Corporates will also start getting into the act. Corporations will now clearly show which options they will pay for and which ones they wont. AND 2010 will see that the generic “Additional Airline Charge” will give way to a specific charge on the credit card receipts.
Intermediaries will also get join the crusade offering differentiated products such as insurance or perhaps even airport parking. Smart intermediaries will use the opportunity to merchandise to their customers and create a differentiation at the point of sale. Something that in the past was almost impossible to do as a mere travel agent. For example – if the airline choice is pretty much the same – would you choose where you buy your product if you received real (as opposed to imaginary) customer service differentiation rather than price alone?
This process benefits just about everyone.
However let me issue a warning that I hope all the players heed. Do not make it too difficult and ALWAYS OFFER A SIMPLE PRODUCT OPTION. The chances are that the products available will start to become so complicated with the vast array of options that the user might actually not be able to make these choices. Particularly when you are in the purchase flow. Remember the old adage. Don’t put obstacles in the way of the sale of your product.
For now – this is going to be a fun ride. Get prepared for it and start thinking how you can join this bandwagon. There is a lot of money to be made. Just make sure you know how and when. This is not the time to be passive. If you don’t have plans in place in Q1 – you will be outpaced by those who do.
Let’s face it – a seat is a seat is a seat. Or is it?
When you think about the motivation you have to choose one airline over another – in the past it was accepted that you would purchase a bundled product.
Thus the sale of the final item required an assessment of a basket of features that came bundled with the ticket.
Fast forward to 2009 and the airlines have woken up to the fact that by unbundling their products they can make more money. Great for the airlines but what about John and Suzie Q Traveller?
Is this necessarily a good thing for them. Actually I believe it is.
The airlines from time immemorial have always wanted to obfuscate the price of the ticket that you buy. Why else would they have such a complicated product.
The spectrum of carrier product offerings is enormous. You have your bare bones product – yes it is technically possible to get a Ryanair ticket without paying for check in – but it sure is not easy.
Or you can sit back and relax and buy a bundled product on BA and get everything included – and get a nasty shock when you find it isn’t. Frontier even lets you know the choice and powers its website with options that span the spectrum.
In 2010 as the airline emerge from their lethargy of recession based slumber to power ahead with new ways of differentiating their product you will be presented as a traveller with a wide (some might say wild) array of choice.
In some cases it will be too much choice. If they do a good job people will be able to buy standardized products as bundles or pick and choose what they want. So much for the 3 click purchase model!
That the airlines will offer this wide array is not in doubt. How will the market adapt to it will be very interesting. Firstly let me just get my current pet philosophy out of the way.
I absolutely believe that the legacy GDSs will fail dismally in providing tools to the intermediaries for the purchase of these differentiated products. Anyone who doesn’t believe this will be just road kill along the way.
So the airlines and the smart intermediaries and companies who are going to provide the tools for this will start to distance themselves from the legacy environment of the traditional GDS based model.
Compensation and use will fragment even further than it already is. If you don’t believe me – just take a peak at your current GDS contract and your airline contract and see if they match up!
Airlines will offer trade up options. Many airlines already do. For example United will allow you to purchase an upgrade to a better seat on just about any fare.
The restriction of only purchasing at the point of airlines website or service delivery (eg airports and on the plane) will also fall and the user will be able to trade up and buy ancillaries at the point of sale – online or offline.
TMCs and corporates will also start getting into the act. Corporations will now clearly show which options they will pay for and which ones they wont. And 2010 will see that the generic “Additional Airline Charge” will give way to a specific charge on the credit card receipts.
Intermediaries will also get join the crusade offering differentiated products such as insurance or perhaps even airport parking. Smart intermediaries will use the opportunity to merchandise to their customers and create a differentiation at the point of sale.
Something that in the past was almost impossible to do as a mere travel agent. For example – if the airline choice is pretty much the same – would you choose where you buy your product if you received real (as opposed to imaginary) customer service differentiation rather than price alone?
This process benefits just about everyone.
However let me issue a warning that I hope all the players heed. Do not make it too difficult and ALWAYS OFFER A SIMPLE PRODUCT OPTION.
The chances are that the products available will start to become so complicated with the vast array of options that the user might actually not be able to make these choices. Particularly when you are in the purchase flow.
Remember the old adage. Don’t put obstacles in the way of the sale of your product.
For now – this is going to be a fun ride. Get prepared for it and start thinking how you can join this bandwagon.
There is a lot of money to be made. Just make sure you know how and when. This is not the time to be passive. If you don’t have plans in place in Q1 – you will be outpaced by those who do.
NB: For a recent discussion about merchandising and GDSs, listen to this podcast produced by IAG blog with Tnooz editor Kevin May and Timothy O'Neil-Dunne.