At the CASMA conference in Montreal last month, one of the most interesting sessions was on airline merchandising and ancillary revenue (canâ€™t swing a cat at a conference these days without hitting a merchandising panel).
The arguments for and against (although no one ever actually goes on the record anymore as against) merchandising have been covered extensively, but what was interesting about this session was the audience response.
The session itself was straightforward: Jim Davidson of Farelogix, Tony Dâ€™Astolfo from Rearden Commerce, Paul Rose from PR Revenue Management and Stefan Frank from ITA Software presenting their views on merchandising and ancillary revenue.
This part of the session was about 45 minutes, and was a fairly standard company-by-company presentation of each participantâ€™s take on the topic.
The next hour-plus was audience and panelist interaction. The most striking aspect was the tone of the questions, comments and discussion.
Unlike at past discussions at CASMA and other conferences, no one seemed to question the validity of merchandising or ancillary fees; what airline attendees and technology providers were asking were questions starting with “How do I”:
- If I charge for baggage, whatâ€™s my liability when itâ€™s lost?
- Should I use the frequent flyer number as the basis of all personalization efforts?
- How do I change our workflow to support new services?
- What new inventory controls will we have to implement to guarantee availability of pre-sold items (blankets, meals, etc.)?
- How can we convince consumers this is a good thing?
Tony Dâ€™Astolfo had a great response to the last point: â€śItâ€™s not a fee, itâ€™s a value-add!â€ť. Airlines, he says, need to get over their fear of customer backlash and just deliver value.
It was obvious from the discussion that best practices need to be developed by the airlines to support merchandising; based on the questions asked, they seem to be just at the beginning of that process.
As one airline employee tells me: “It takes a lot of effort to turn a battleship but once under steam – it takes more effort to stop a battleship.â€ť
Nevertheless, the biggest question (number six, if you like) still remains:
- When will the technology catch up so merchandising can take place across all sales channels, and in such a way that these services wonâ€™t be commoditized?
Given that several GDSs have publicly stated it will be 12+ months before they deliver functionality that can support ancillary revenues, it wonâ€™t catch up, at least on the legacy side, this year.
Thereâ€™s a lot of movement in the technology space outside the GDSs, but given that most travel agents still swear by their GDS desktops, those agents (and other sites that are powered by the GDSs) will not get convenient access to the merchandising data for some time to come.