Why airline commoditisation is so last year

From using VR to seat auctions for an upgrade or making Wifi a free-for-all, improving the airline experience could see ancillary revenues soar

Airline travel has long been criticised as ‘commoditised’ but as the market becomes more competitive with the boom in budget airlines, not to mention consumers becoming more demanding, that is changing. For those embracing change it could prove to be a worthwhile exercise. Judging by a recent Global Passenger Insights Survey for APEX, the airline passenger experience association, certain things really do matter to consumers, and played right, can help to boost much sought after ancillary revenues.

Topping the list of customer priorities is cabin comfort with 70% of 3,400 respondents from 18 different countries saying that this beats entertainment, service, food & beverages combined. North Americans – the “heaviest travellers” according to the survey, are the least satisfied with cabin comfort while Asians are the easiest to please.

So won over are customers by cabin comfort that the survey also finds that eight in ten customers (86%) who are convinced to upgrade to premium economy would do so again. The trickier business, however, is getting passengers to upgrade in the first place. Nevertheless, this is a worthwhile exercise for those running the marketing machine, and for those focused on driving ancillaries.

Getting creative

Virtual reality, which is becoming mainstream, is one way to do this and Virgin and Qantas (supposedly in an industry first with Samsung) were the first airlines to give customers a taste of how the other 10% travel by allowing them to ‘try before you buy’. Other airlines, like the Dutch carrier KLM, are also experimenting with VR to sell cabin upgrades and have created an iOS and Android app that allows users to ‘virtually’ walk around the Dutch carrier’s newest Boeing 787 Dreamliner to ‘test out’ its business-class seats.

Another innovative, creative approach to convince customers to upgrade is the seat auction. According to APEX, over 30 airlines “have tested, or are currently testing, the idea of auctioning off unfilled premium seats to passengers through various types of bidding systems at their departure gates”.

Virgin America, for one, is one encouraging customers to download the Seatboost app to bid for an upgrade.

Leading the Wifi way

Some firms are implementing technologies like the one developed by Routehappy which gives travellers the ability to choose a flight based on the type of aircraft, seat, Wifi, entertainment and so. One of those is metasearch engine KAYAK and Kate Williams, the firm’s director of global communications recently told EyeforTravel that they are seeing customers hungry for data on which to base their decisions.

So we’ve known for a while that consumers value free Wifi more than a free lunch, so this is undoubtedly a product that could help airlines to stand out. Today 60 airlines in the world offer Wifi in some form or other, according to Routehappy’s annual global state of inflight Wifi report, but with the exception of Virgin America - the only US airline to offer Wifi on 100% of its flights – it’s not yet freely available. Again it’s the US pack leading the Wifi way. Elsewhere Lufthansa and Emirates are best at keeping people connected on long-haul flights, while a number of non-US carriers are also upping their game with, the report says, “substantial Wifi offerings”. Two of those – SAS and Norwegian - are Scandinavian Airlines.

More from SAS here on its digital strategy 

 

Given that one-third of passengers used Internet or social networking during their last flight, according to the APEX survey, as Wifi becomes more widespread there is potential for inflight marketing offers. Many airlines are linking their Wifi offerings to loyalty – a good move judging by the survey as 50% of frequent fliers and those with status say their programme was the biggest factor in booking their last flight.

However, there is an argument that as the technology improves and becomes cheaper, it will be better for airlines to make Wifi a commodity on all flights. Why? Because the potential for partnerships that deliver the customer with personal and relevant information during the flight (in destination activities, taxi services, information for foodies) could really help ancillary revenues to soar.

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