Alternative Airlines: taking a ‘contrarian’ approach to flight distribution
The MD of the flight search and booking agent spoke to Pamela Whitby about local strategy new partnerships, crypto payments and why being contrary might be positive news for air travellers
The clue, it would appear, lies in the word ‘alternative’. In the competitive travel market, where many companies continue to strive for ways to service the end-to-end customer journey, Alternative Airlines is, as MD Sam Argyle admits, taking a “contrarian approach”. The online travel agent (OTA) has decided to focus purely on flights and the reason, he says, is this: “We simply want to be the best in one area - flights. We have put technology absolutely front and centre of our business and we have really focused on the user experience.”
The 32-year-old, who left his job as an investment banker at Rothschild in 2015, saw the potential in the company that his father established in 2007, and says he has “always had travel in my blood”. He sounds excited, and may have reason to be. In 2019, the company was named one of the fastest growing in the UK by the Sunday Times Tech Track 100, and over the past three years has seen revenues rise from £3 million to £19 million. In addition, what was a two-man band has grown to a team of 43 people, a third of which, he says, is tech-focused.
We have put technology absolutely front and centre of our business and we have really focused on the user experience
Although the UK-based office sits at the end of a runway at Gatwick Airport, growth has been global with just 17% of revenues derived on home turf. And since 55% of bookings were made out of the US in 2019, where revenues rose by 185%, it is no wonder that by the second quarter of 2020 an office will open in Boston. “Every month we take bookings from 120 countries and so we see this as an entirely global business in the way we drive traffic to the site,” he says.
*Update 20/2/2020* Although not willing to release net income figures, Argyle says the company is profitable and will continue to target sustainable growth.*
Local love, payment power and partnerships
A central differentiator and focused aim is having a strong localisation strategy. “We are not necessarily competing on the mainstream stuff, more the remote destinations where people want to have an online offering that is relevant to their search,” Argyle explains. In other words, when people are searching for far-flung places the idea is for them to see the big recognisable carriers like BA, Virgin, Emirates but also those that “fly through the grass strips”. Think Skyward Express in Kenya, Precision Air in Tanzania, and Air New Guinea in Papua New Guinea. Currently, the group is connected to 600 of the estimated 900 airlines globally and is ramping up efforts to secure more partners that are off the beaten track. “We think there is an opportunity here because it is about giving people more choice,” he says.
Alternative Airlines accepts 160 currencies and 25 different methods of payment because "people have very different tastes in how they want to pay"
One of group’s best selling routes, for example, is Lima to Cusco, the starting point for expeditions to the Machu Picchu in Peru. The goal, as he tells partners, “is to ensure that we have local airline content on those types of routes as they are quite hard to book on mainstream sites.”
In any successful localisation strategy currency is centre stage, and Alternative Airlines accepts 160 as well as 25 different methods of payment; these include everything from Paypal Credit to Mastercard, Klarna and Alipay. If someone is coming to the site from Nairobi, or San Francisco or Sydney, Argyle understands that “people have very different tastes in how they want to pay”. And he wants to solve that problem.
Another differentiator is that it is working to allow customers to pay in instalments. Affirm, the brainchild of Paypal co-founder Max Levchin, which has raised $800 million to allow travellers to pre-qualify for loans to buy flight and other travel and non-travel products, is one of the partners the OTA is working with.
Over 80% of new followers in November could be attributed to the coverage about Utrust – the cryptocurrency payment solution
The belief that cryptocurrencies will play an important role in the future of commerce is another example of a forward-thinking approach. In November, the firm partnered with crypto payment solution, Utrust, which allows customers to pay for flights with a choice of several different cryptocurrencies including Bitcoin, Ethereum, DASH, DigiByte and more.
According to Argyle, the firm is the only travel agency offering crypto payments and, in fact, even for many airlines this is not an option. Since October 2019, when it became possible to book using a digital asset, 0.64% of total bookings were made using cryptocurrencies and target of 5% is set for the next 12 months.
An added bonus was the uplift in engagement and exposure across social channels – over 80% of new followers in November could be attributed to the coverage about Utrust.
Onwards and upwards
By 2023, the company is looking for turnover of £100 million and is currently focused on ways to drive ancillary revenues. The recent partnership with Duffel, another fast-growing tech start-up focused on airline distribution, is part of the plan.
“We had been looking for a great partner to work with on NDC [IATA’s new distribution capability] as it is very clear to us that airlines are changing their distribution strategy. As a flight only site, we have to make sure that we are very much in sync with that,” he says.
Already, a number of airlines have started to push content through NDC channels, and the shift to unbundling of fares and ancillary products is accelerating. In fact, recent figures from airline ancillary consultancy IdeaWorksCompany and tech firm CarTrawler show that airline a la carte revenue in 2019 is estimated to be worth $75.6 billion worldwide.
To stay relevant companies like Alternative Air have to up the ante. Using Duffel’s API technology, Alternative Airlines will be able to plug into multiple airline reservation systems to make bookings based on live seat availability and also provide exclusive ancillary products and flight offers. From adding a bag at the point of purchase to quoting a range of fares, this is the current focus.
Unbundling of fares is exactly the right thing to do as customer want choice
Speaking about the importance of being focused on customer experience, Argyle says that the “unbundling of fares is exactly the right thing to do as customer want choice". However, it does make matters more complicated for OTAs and it will be crucial and incumbent on companies like Alternative Airlines to help the customer at the point of booking in a highly transparent way. This is one of the reasons that Alternative Airlines, rather than trying to do everything – such as hotels, car rentals, tours & activities – is staying focused on flights.
There may be stiff competition from big names like Expedia, Kiwi.com and e-Dreams, but as the planes fly over and shake the Alternative Airlines office at the end of a Gatwick Airport runway, it would seem that this UK-based company is doing some shaking up of the air industry.
If you would like to hear more about how other corners of industry are tackling customer experience, join us for next week’s webinar– Personalized CX in Travel Cross-Industry Panel