Creative review of airline ancillaries looks to Allegiant, easyJet and Amazon

IdeaWorks has been banging the drum for ancillary revenues for a decade or so, and its latest contribution highlights innovation over earnings.

Its 2017 Top Merchandising Innovations to Delight Passengers and Boost Profits report,  sponsored by CarTrawler, looks at specific products and services introduced by cross-section of airlines which “reinforce the need to include creativity in the pursuit of ancillary revenue.”

Allegiant Air is credited with having updated a concept which has its roots in the “Pan-Am era” by getting into property development, building its own resort in Florida.

The masterplan for the 20-acre Sunseeker Resorts site includes “a resort hotel and up to nine condominium towers and an array of restaurant, bars and retail concepts.”

Allegiant’s press release announcing the project says it “marks an important step in Allegiant’s evolution as a travel company, offering customers more opportunity for leisure experiences”. IdeaWorks’ take is “the airline is developing Sunseeker Resorts from the ground up as a massive ancillary revenue generator”.

The site is close to Punta Gorda airport, from where Allegiant serves 39 different cities. IdeaWorks thinks that condo owners and hotel guests will use the airport, bringing in additional flight revenues for the carrier.

The scale of this innovation is different from the other merchandising initiatives highlighted easyjet gets a mention for its recently launched “worldwide by easyjet” which allows passengers to book connecting flights at Gatwick on partner airlines – currently Norwegian and Westjet but with others to come.

easyjet adds a £34.50 fee onto the cost of the booking. IdeaWorks uses this fee to extrapolate what ancillary revenues it thinks this will generate – $200,000 a week. If easyJet expands the Gatwick strategy to its other bases around Europe, “it’s easy to understand how Worldwide by easyJet could eventually produce revenue in the millions.”

Elsewhere, Delta’s repositioning of how it markets the products and services around bags – RFID chips so passengers can track their bags around the airport, loyalty points if the bag doesn’t get from the hold to the baggage carousel within twenty minutes of landing, self-service bag drops – is framed by IdeaWorks as a sign that it is moving “from a fee-based mentality to value-oriented retailing.”

The report also looks outside of travel and highlights some comparable initiatives where businesses are getting creative in order to generate revenues outside of their core activities, winning new customers or upselling to existing ones.

Amazon’s Smart Home Consultation service is not even a drop in the ocean for a business which recorded net sales of $43.7 billion in the three months to end-Sept17.  But, as IdeaWorks points out, “humans still fill a role in selling stuff to each other” and suggests that, for airlines, “there are initiatives where employing sales people might be very helpful.”

Related reading from tnooz:
Airlines mix and match their relationship with GDSs and fare families (Sept17)

Image by Sunseeker Resort’s gallery.

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