Ancillary revenues have been skyrocketing in the last decade and it generated around $60 billion of industry revenue for airlines in 2015. It significantly contributes to the increased profitability enjoyed by many airlines.
Understandably, the airlines want to grow continually in this area. In the beginning, they focused on creating direct sales channels which meant that there is definitely an untapped market elsewhere. These markets are sure to provide a competitive channel to the airlines thus cashing on the opportunity to their maximum benefit. The willingness to expand commercially and connect with the end users to promote brand interaction is rising. These revenues generate an added advantage for the airlines to customise the travellers’ experience.
Travel agencies and mobile platforms have taken this product close to their hearts and are actively serving as a channel to pursue revenue growth thereby contributing as a conduit to get to the travellers. Travel agencies form a close long-standing bond with business and leisure customers.
This relationship forms a ground for the agencies to cater to the personalization of every customer. As airlines look to polish their retailing and merchandising skills, travel agencies are considered to be platforms where the consumer would want to buy their products and services. Also, the consumerization of technology has created an expectation of seamless user experience where the ancillaries exist to grow for both the end users and the one serving them.
In a similar fashion, mobile apps can be a marked as a major source of ancillary revenue growth. The mobile ecosystem has changed the passenger behaviour by 10 times as it clearly showed a dramatic shift with over 80% of travellers using it as a primary tool on the go. The market opens genuine opportunities to drive such revenues as the mobile apps offer constant consumer engagement on an all time accessible platform.
The interaction with the airlines is bare minimum at the airport as it involves just waiting in the line or buying retail in the places that are not revenue sources for the airlines. The mobile app comes with the prospect for the airline to encourage positive brand interaction by commercially engaging the travellers. Such activities provide a financial incentive to the airlines where they can enhance travel experience during and after the flight. Airlines that do this well can enhance passenger loyalty and maximise per passenger revenue.
A consumer making a travel purchase has his or her credit card in hand, ready to buy. At this buying stage, these channels help the airlines capitalise on the opportunity to target the right add-on product to the traveller thus creating unique facilities to revenue generation.