“It is of the highest importance to be able to recognize, out of a number of facts, which are incidental and which vital.” Sherlock Holmes shared that wisdom with Dr. Watson to explain how he solved a tricky case.
There are also many clues to consider when it comes to deducing an effective airline ancillary merchandising program. Those clues lie in observations from airlines around the globe — both venerated carriers and younger brands. They also lie in an examination of techniques ranging from revenue management to economics to graphic design.
But it is “a capital mistake to theorize in advance of the facts,” Sherlock cautions. For that reason, the Accenture Amadeus Alliance researched and compiled data before developing the conclusions in Merchandising 2017: Current Trends in Airline Ancillary.
As an advisor on the paper, I saw firsthand the meticulous and painstaking research that went into the data collection. We looked at the techniques used by more than 60 airlines for creating offers.
Despite the variety of techniques, there is a common assessment that applies for offers from all airlines. On one end are the basic offers: one-size-fits-all concept with bland and unengaging design. On the opposite end, the full-fledged offer dynamically embraces customer heterogeneity.
We assessed and placed offers in this framework and reflected the outcomes by business model and geography.
Checked baggage offers, which represent the most popular ancillary option around the world, focus on connecting with the customer and making the offer at the best time. Airlines are not trying to convince customers to bring baggage the customer doesn’t need. Most low-fare carriers have already made choices about checked baggage available during booking on their websites. In some regions, full service carriers have caught up, and some have even surpassed the industry norms in their offer design and maturity.
While checked baggage offers are almost universal, bundling flight related ancillaries is growing in popularity. Economists proved the benefit of bundling to both consumers and airlines forty years ago. But execution was challenging. Technology has advanced to make it possible, but when many of us considered how we could design an offer of this nature, we ourselves sounded like the Great Detective: “Data! Data! Data!” [Sherlock Holmes] cried impatiently. “I can’t make bricks without clay.”
Now airlines have the data, the clay, as it were, and are starting to make bricks (to continue Holmes’ metaphor). And airlines have started to see the results. The benefits of ancillary merchandising are: 1) increased customer satisfaction, through relevant offers; 2) increased competitiveness, through offer management; and 3) increased revenue, through advanced pricing and revenue management.
What’s the next step? “Elementary, my dear Watson!” Take a look at Merchandising 2017: Current Trends in Airline Ancillary. See where your airline fits in, and how your strategy locates you within the industry.