Ancillary revenue (AR) has been the focus of ever increasing media attention as airlines struggle through the global economic downturn.
Airlines worldwide reportedly collected $10 billion in AR in 2008 according to the Guide to Ancillary Revenue and a la Carte Pricing* published recently.
That’s an annual increase of 345% year on year.
But although ancillary revenues have the potential to be a great source of additional income, travel brands should beware.
AR programmes that focus purely on profit are in danger of alienating consumers. Instead, travel businesses should start with the needs of their customers – and focus on value products and services that will add to and improve their experiences.
Ancillary revenue experts Collinson Latitude have devised a ten-step strategic guide to help airlines hoping to make the most of this opportunity:
Understand success drivers:
When implementing an AR strategy, travel brands must dedicate time to define and articulate the goals of the programme with the wider commercial, brand and loyalty organisational teams.
Are the key objectives to differentiate themselves from competitors, to improve customer satisfaction, or only to increase profits?
Is gaining a better understanding of customers through data insight important?
Whatever the driver, travel brands need to develop propositions that will motivate customers to change their behavior in the ways that the brand wants them to.
Earlier this month when Collinson Latitude previously researched* how many loyalty managers had clear vision on how they were contributing to company success, the answer was surprisingly few.
It is good practice to ensure that the AR strategy fits the business plan for the brand and is measured accordingly.
Ancillary revenue has been the focus of ever increasing media attention as airlines struggle through the global economic downturn.
Airlines worldwide reportedly collected $10 billion in AR in 2008, according to the Guide to Ancillary Revenue and a la Carte Pricing published recently.
That’s an annual increase of 345% year on year.
But although ancillary revenues have the potential to be a great source of additional income, travel brands should beware.
Ancillary revenue programmes that focus purely on profit are in danger of alienating consumers. Instead, travel businesses should start with the needs of their customers – and focus on value products and services that will add to and improve their experiences.
Janet Titterton from ancillary revenue expert Collinson Latitude has devised a ten-step strategic guide to help airlines hoping to make the most of this opportunity…
Understand success drivers:
When implementing an ancillary revenue strategy, travel brands must dedicate time to define and articulate the goals of the programme with the wider commercial, brand and loyalty organisational teams.
Are the key objectives to differentiate themselves from competitors, to improve customer satisfaction, or only to increase profits?
Is gaining a better understanding of customers through data insight important?
Whatever the driver, travel brands need to develop propositions that will motivate customers to change their behavior in the ways that the brand wants them to.
Earlier this month when Collinson Latitude previously researched how many loyalty managers had clear vision on how they were contributing to company success, the answer was surprisingly few.
It is good practice to ensure that the ancillary revenue strategy fits the business plan for the brand and is measured accordingly.
Related posts:
Day Nine of Ten – Understanding and boosting ancillary revenueDay Two of Ten – Understanding and boosting ancillary revenueDay Three of Ten – Understanding and boosting ancillary revenue
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Ancillary revenue has been the focus of ever increasing media attention as airlines struggle through the global economic downturn.
Right now AR for airlines is all about survival, not about customer needs. If you were in their position what would you do? Stop charging for everything you can. Or continue to charge for everything, safe in the knowledge that the public’s memory is very short, especially if you give them a special offer later on.