“BEYONDANCILLARYREVENUES”

The Rise of New Mobile

Infotainment Services

Pieter K. Zylstra, Head of Strategic Programs, SITA AsiaPac

Terrapinn 2014 World Low Cost Airlines Conference, Singapore, Feb.18-19, 2014

2 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

Aviation: Where is the money?

Source: IATA, 2013 (based upon report McKinsey & Company).

Outlook 2014 Profit Margin: 2.6%

Source: IATA, IdeaWorks 2013, CAPA 2012

How can Aviation TransportationBusiness Model survive?

ATI profitmargins

trans

port

“Razor-thin”Margins:1%-5%

1st wave:Transportationbusiness model

“Healthy”Margins:10%-20%

anci

llary

2nd wave:Non-Transportbusiness model

Time

Rise of Ancillary Revenues

Source: IdeaWorks, Oct.2013, LCC websites

“Third Wave”: Mobile InfotainmentATI profitmargins

trans

port

“Razor-thin”Margins:1%-5%

1st wave:Transportationbusiness model

“Healthy”Margins:10%-20%

anci

llary

2nd wave:Non-Transportbusiness model

Timein

fota

inm

ent

“Fat”Margins:

>25%

3rd wave:Infotainmentbusiness model

“intelligent transportation”“”transportation”

today

8 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

Beyond Ancillary Revenues…

in the coming years allyour passengers will becarrying smartphone &tablets into the plane.

personal communication devices are approved by more and more aviation

authorities worldwide

Next generation (Ka)satellite technologies

offer high-speedbandwidth

Do you want to knowyour passenger?

Rail versus Airlines…

11 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

How can LCCs create PersonalProfitable Services?

personal: invest in agile PSS functionality

services: integrated architecture with “big

data” capabilities

profitable: invest in“touchpoint” solutions& capture experiences

13 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

14 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

SITA’s Crewtablet solutionPassenger List

Inventory

Forms & reports

Slow paper based reporting

Admin overhead Heavy weight &

fuel consumptions No pax service

personalization

Crewtablet movie

15 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

Fully managed solution, opex-based

Crew App

Crew Server

Integration

Reservation & TicketingRoster, Duty free, LoyaltyMobile Learning, MRO, BagPayment Service Providers

Business Process efficiency

New revenues

Passenger Services

Crew Portal

Paperless operations

1

23

4

16 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

Module-based solution

2013 20142014

Analytics

Portal

Core

Pax

Crew

Bag Track

Retail

Defects

Bus Intel.

M-learning

Live Sces

Inventory

17 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

ROI-based solution

CREWTABLET PAX

COSTREDUCTION

CUSTOMERSATISFACTION

CUSTOMERREVENUE

RETAILOptimize passenger

experience@ plane (by crew)

Increase passengers loyalty(frequent flyer program &

affiliate program)

Enrich passenger profile(especially VIP-program)

Automate digital claim process@ plane / back-office

Turn passenger loyalty intocross/upselling revenues

DIGITALPASSENGER

PROFILEReduce delay “no show”

STRENGTHENCOMPETITIVEPOSITIONING

SOLUTIONSTRATEGIC

GOALSMODULEOPERATIONAL

EFFECT(S)SERVICE

FUNCTIONALITY

DIGITALPASSENGER

SURVEYS

CREW

BAG

OTHER

CrewTabletfunctionality

CrewTabletfinancials

COSTS CUSTOMER COMPETITIONCOMPLIANCY

3

4

1

2

PAXCREWCORE BAG

RETAILCABINDEFECT E-LEARNING

MEALSLIVE

SERVICES

TBD

1 Process & issues 2 Mapping modules

3 ROI Benefits logic

Negative ROI

crewtabletfunctionality

crewtabletfinancials marginal

revenueper user

Marginal costsper user

PositiveROI

4 ROI Business Case

18 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

Our vision on the “third wave”:

shared wireless infra & platform:

• focus upon enterprise mobility cost-savings

• launch personal profitable passenger services

Examples the “third wave”:mobile personal digital services

Crew (operational efficiencies

& service personalization) Pilots (EFB, Fuel, Safety, etc)Maintenance (remote MRO,

Smart diagnostics)

Connectivity(Internet & GSM)

Landing PageDigital MagazineOn board retail

Digital Audio/Video(Live / On Demand)

“E-Connected Aircraft”(B2C, B2E, B2B & M2M)

OnAir Play: Entertainment on PEDs

➔ Favourite amenities when flying:

© OnAir 2013 21

Other

None

Shop online

Social media

Online work

Text messages

Semd email

Take pictures

Connect to Wi-Fi

Read emails

Offline work

Watch movies

Read books or mag

Play Games

Listen Music

2%

4%

7%

18%

19%

23%

23%

24%

30%

31%

39%

44%

48%

54%

68%

Source: 2013 Airline Passenger Experience Association (APEX) and Consumer Electronics Association (CEA®).

Specific Usage of PEDs During Flight

Examples “third wave”:mobile personal digital services

How can SITA support?Our 4-Step Approach

Roll-outProgram Management Office

Year 1 Year 2

Transformation Roll-out

…

PhysicalInfrastructure Deployment +Network Integration

ApplicationCustomization& SystemIntegration

OrganizationTransformation(incl. processes)

Awareness session of “best ATI practices” & demonstration SITA solutions (ATI apps).

What is your position in the value chain?=Strategic Deployment Options

How would the preferred innovation roadmap look like?=Integrated Service Roadmap

What integrated architecture should support the roadmap?=High Level Architecture

How does the business case look like? = Benefit Logic

How to deploy the innovation roadmap? = Governance Advice.

1-3 Days

Insight Day –Master class

!!

!!

!!

6-12 Months

Testbed (early deployment)

Governance

Transformation

@IT / Corporate Management

Product Management

Roadmap Introduction

Service Organization(& Processes)

Network InfrastructureApplicationsMiddleware Platform

@back-office@site

Physical Infrastructure@sites

ArchitectureLogical components

Back-office architecture

Middleware platform

On site infrastructure

ServicesInnovation Roadmap:Public ServicesEnterprise ServicesM2M Services

PropositionValue Chain AnalysisStakeholder AnalysisGovernance & ControlDeployment Scenarios

Business CaseBenefit Logic

Business Case

Investment Requirements

Capex/Opex-financing

Strategy & Business Case

3-6 Months

24 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

• Beyond Ancillary Revenues

• Personalization is key

• LCCs & personal profitable passenger services

• Crewtablet: best practices & ROI model

• Are LCCs ready for the “third wave”?

• Q&A

Contents

25 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

Thank you for your interest!

Questions?

Contact details: