4 months ago
 

In a mobile-only world, will airlines charge for web bookings?

Right now airlines are introducing fees for bookings via the GDS but imagine a scenario five years down the road where an airline charges a fee for booking via the website instead of the mobile app.

It’s really not that far-fetched as a concept.

NB: This is a viewpoint from Philippe der Arslanian, chief executive of Answair, a strategic intelligence firm to help airlines go digital

Back in the 1990s, who would have predicted that passengers would have to pay a specific fee for calling their airlines, when this was seen as the best way to personalize and upsell with a human touch?

Nowadays, call center related fees are considered the norm and face no resistance from customers.

The shift from web to mobile will likely follow the same carrot and stick approach.

Airlines will slowly begin to provide more attractive functionalities such as mobile-only fares and extra miles for mobile bookings, while also penalizing users with specific fees on other channels – including the ‘traditional web’.

Today, the percentage of sales done through mobile globally is still in the mid-single digit range, but that is changing fast.

SITA predicts that airlines will nearly triple this figure to reach 12% of total sales in the next three years alone (with ancillary attachment rates following the same curve).

These statistics can be a bit misleading, as variations between airlines types and regions can be massive.

For example, an low-cost carrier in Asia usually has a much higher mobile revenue share than a full-service carrier in Europe, and we have seen specific airlines reach a 15% mobile revenue share in just six months based on aggressive and well-rounded plans.

Nevertheless, the trend is set, and applies to all airlines worldwide.

Today, mobile use is still mostly limited to interactions done during shopping, booking, check-in and boarding.

But these mobile touch points will multiply to a great extent, creating dozens of opportunities for airlines to notify and to sell, particularly around the DoD (Day of Departure). Mobile vs. web will follow the same pattern as web vs. call centres.

In the early days, the focus will be on matching the features, something that is addressed today through responsive design. Going forward however, mobile will overtake the web in its offering, and end up representing a true superset of what the web offers today.

The frequency of mobile-only interactions will also drastically increase due to:

  • the quest for immediacy related to instant notifications and impulse-buy decisions e.g. coupon or lounge access as well as “pay later” options
  • the limited real-estate of mobiles dictating simple, easy-to-buy, and personalized offers

The a-la-carte complex menu with too many ancillary options that currently exists on the web will simply not fit on mobile.

Personalized bundles and relevant packages will emerge instead.

Booking flow and ancillaries will be timely and sparsely offered to travelers on their device only at the right time and the right location e.g. exit row or seat upgrade before boarding a red-eye flight, to be paid in miles.

Some carriers are already ahead of the curve, with features more advanced than the typical seat and luggage offers: American and Emirates provide a pay-later option, Jetblue offers a fast track, and Lufthansa has extended its offer to rail tickets.

Ryanair leads the way with monetizing its seat-map with a slick and colored mobile-design, while BA introduced “my timeline”, which provides relevant information for users from check-in to landing.

Obviously, this penetration should be a selective one and is subject to a few reality checks, the prime example of which is basic wifi access.

With that in mind, we will likely see this upsell first take place on a domestic and regional basis.

However, soon enough, and well beyond responsiveness and mobile-first initiatives, mobile-only will become the predominant travel assistant for travelers on the go, giving them comfort and reassurance in any decisive moments, as well as timely, relevant offers that customers will be happy to buy.

NB: This is a viewpoint from Philippe der Arslanian, chief executive of Answair, a strategic intelligence firm to help airlines go digital

NB2: Image via BigStock.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. Vijay Subramanian

    Possibilities are already emerging and with extreme analytics Airlines could tailor many more things that we can actually imagine at this time. Barring regulatory issues these tailoring could be the shape of things to come earlier that we can imagine. If Hotel chains can buy into destination activity start ups how long does it take to get these integrated with airlines to deliver bundled offerings. Boundaries are blurring.

     
  2. Timothy O'Neil-Dunne

    I have to disagree with this analysis. The requirement for a heavily regulated industry (such as airlines) to disclose large amounts of information particularly in the interaction/touch points ultimately will restrict what an airline is able to do – yes that means they need a lot of real estate. There is a requirement for the regulators/governments to protect their citizens from varying forms of abuse. However in the case of airlines some of the most odd disclosure requirements are driven by the regulators. The consumer may not care to be bothered with such pesky things as the CoC (Conditions of Carriage), but they exist for a reason. I concur with both the author and Brian Gross that there are some great Mobile possibilities. It is interesting to see that some airlines are charging a fixed DCC in recompense for the GDS fee where some have charged a variable amount. With unbundling of GDS products and services a natural out come of the desire to reduce the cost, we can see that the consumer will likely be presented with a plethora of options. In our own engine (at Air Black Box) we have to steer through multiple regulations (some of which conflict) when we deliver our Digital Selling Platform tools that are adaptive to the brand. We are completely agnostic to the complexity and let the brand drive the decisions. The various Conventions – Chicago, Montreal etc were originally supposed to prevent this level of complexity – well you know now that is not the case. So for Mobile to be the driving channel for all communication and for the airlines to try and drive traffic to mobile through additional non-mobile discrimination – I think is unlikely.
    Cheers
    Timothy

     
    • Philippe Der Arslanian

      You are right that this ever-increasing transparency and unbundling should not be misleading to consumers. However, this overall digital transformation has shown that unneeded complexity and complex rules – slowly but surely – will eventually leave the way to a new experience with dozens of new touchpoints and conversational commerce setting. Exposing Web-only fares, charging a call center fee, or simply unbundling fees was also seen as very “unlikely” some years ago.

       
  3. David Sjolander

    The author makes a lot of good points about mobile capabilities and ease of use, but does not provide any reasons why an airline would be motivated to charge a fee to book on their own website vs. their mobile app.

     
    • Philippe Der Arslanian

      The mobile app. will provide much more opportunities for an airline to upsell ancillaries and enhance retention levels, particularly in the post-booking phase.

       
  4. Brian Gross

    In my opinion mobile is handiest for shopping and service like checkin but not for booking due to limited screen size. Ticket sales increase in mobile at Aeromexico is higher than your stated average and tripled when we launched a mobile first site, but I believe it’s due to the time spent on mobile not because it’s superior to web as an interface.

    Second point call center has personnel costs. Neither web nor mobile do, so to me it hardly makes sense to charge for booking on one but not the other.

    The urgency for airlines in distribution is to reduce GDS fees that are absorbed which often are higher than commissions and even the airline’s profit margin. All direct traffic including from web mobile app chatbot Alexa/Google Home and metasearch, accomplishes that.

     
    • Philippe Der Arslanian

      Yes, mobile adoption can reach high penetration levels in no time depending on the context. Congrats on your performance. However, the mobile challenge is not only to see the ticket sales increase but also the average basket value with ancillaries, both native and third-party.
      Mobile has no labor costs when considering that mobile simply mimics the Web functionality, with the exception of checkin. However, “mobile-only” vs. Web can 1) save labor costs in the event of disruption (voluntary and involuntary) and 2) increase revenue per pax with new contextual opportunities e.g. seat upgrade, lounge access …etc.

       
 
 

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