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Maximizing Ancillary RevenueThe Power of Analytics for Airlines

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Airlines’ ancillary revenues grew more than 160% from 2010 to 2015

18.7

21.29

41.06

40.5

46.11

88.94

0 50 100 150

2015

2016P

2020P

Other Airlines 67 Airlines

76%

77%

74%

76%

78%

73%

75%

70% 72% 74% 76% 78% 80%

Wifi Access

In-Flight Entertainment

IN-Flight Snacks or Meals

IN-Flight Duty Free

IN-Flight Shopping

Respondent Average

Alcoholic Beverages

Satisfaction Index

Ancillary Segment Revenue Booster Higher Customer Satisfaction

Current and Predicted Ancillary Revenue(USD Billion)

Effect of In-flight Ancillary Products onOverall Passenger Satisfaction

48.4

42.8

5.6

Source: IdeaWorks Company, Travelport, Amadeus, WNS DecisionPoint™ Analysis Source: Airline Passenger Experience Association

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Focus on ancillary revenue varies across the globe and depends on the business model

Ancillary Revenue Share – Full Service & Regional

4.8% 8.4%

Median Best in Class

Aeroflot(2.8%)

Aer Lingus(12.6%)

American(11.5%)

Alaska Air(19.5%)

Aeromexico(4.8%)

Air Astana,

PIA(0.8%)

Air Berlin(3.8%)

Air Canada(6.2%)

AF/KLM(7.5%)

Air Greenland

(4.6%)

ANA All Nippon,Emirates(0.5%)

Avianca(1.3%)

British Airways(3.4%)

China Eastern(3.7%)

China Southern

(0.6%)

Delta(9.3%)

Ethiopian(2.7%)

Finnair(4.5%)

Garuda(0.3%)

Hawaiian(9.2%)

Korean Air(8.7%)

LATAM(7.7%)

Lufthansa(5.5%)

Qantas(12.3%)

Qatar(6.1%)

Rex(0.9%)

Royal Jordanian

(0.7%)

Sun Country(8.4%)

TAP Portugal(7.3%)

Turkish(2.5%)

United(16.4%)

Virgin America(10.9%)

Virgin Atlantic(4.9%)

Virgin Australia

(5%)

Region Legend: Middle East and Africa Asia/South Pacific Americas Europe and Russia

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Airlines need to better package ancillary offerings irrespective of sales channels

Pre-NDCPost NDC

Through GDSs, airlines know very little about the behaviour of customers (how they shop, what all products customers view before finalizing one of choice, what is the length of stay on a page etc.)

Airlines cannot provide personalized shopping experience

Search is primarily focused on price and schedule

Travel agents can share personal details about traveller like frequent flyer numbers and corporate identities with airlines (should customers choose to share)

Airlines know details about customers like who is looking for fare differentials implying:

– Scope for personalization

– Shift search focus to value

New Distribution Capability (NDC) program launched by International Air Transport Association (IATA) is a new XML-based data transmission standard which will enhance communication between airlines, travel agents and travellers.

NDC will allow airlines to themselves create and personalize the offers themselves, irrespective of direct or indirect channels.

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Further application of advanced analytics will enable better personalization

Application Areas Key Objectives Data Sources Analytics Techniques

Predictive analytics

Web analytics, Visual analytics, Speech analytics

Campaign management analytics, Web analytics

Predictive analytics

Social media analytics

Flight booking data, Customer profile, Payment data, Loyalty program usage, Ancillary spend

Flight booking data, CRM data

Customer profile (both internal and external sources), CRM data

Customer profile (both internal and external sources), Ancillary spend, Flight booking data, Loyalty program

Social media sites (profiles, comments, likes, shares)

Cross sell additional ancillaries based on customer history and profile

Display alternative offers based on preferred destinations and routes

Figure out preferred channels for branding and promotional communication

Improve channel RoI by analyzing channel cost, transaction volume, average fare, seasonality etc.

Use internal and external sources of client data for efficient marketing, sending the right promotion and marketing communication to the right customer set using the right channel

Segment demographic data to narrow down on potential high value segments

Analyze travel patterns and spending behavior to gauge future propensity of generating high margin transaction

Maintain a positive online/social media reputation by constant monitoring of positive and negative mentions about the brand

Collect data on customer expectations and customer grievances for more effective and relevant customer engagement strategies

Ticket & Ancillary Sales

Channel Management

Targeted Marketing

Identifying High Value Passengers

Social Listening

To know more about ancillary revenue maximization trends and strategies, To download a copy of the report click here

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A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions.

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