Broadening Ancillary Revenues

Airline Retail Conference

London

July 10th 2012

Rohit Talwar

CEO - Fast Future

rohit@fastfuture.com

www.fastfuture.com

Contents

• Presentation p. 3

• About Fast Future p. 47

• Image Sources p. 57

• Background Notes p. 63

Our Research

• Drivers of change

• Science and Technology

• Customer expectations

• Innovation priorities

• Strategies and business

models

• Surveys to test ideas and

scenarios on a global

audience

‘Future Proofed’ Organisations

Work on 3 Horizons in Parallel

4-10+ Years

Creating

the Future

1-12 Months

Operational

Excellence

1-3 Years

Drive for

Growth

Future Proofing the Business

Mastery Markets

Models

Magic

Management Mindset

Muscle

Message

Markets – What are the Key Trends?

Length of time required to

complete core activities from

check-in to boarding

Intrusive security procedures

Thought of missing a flight

Which features of the airport environment do

you find to be most unpleasant or stressful?

Transport Integration

Which factors contribute the most to your

emotional wellbeing in the airport?

Speed and simplicity of the

check-in process

Speed and convenience of

the security process

Speed of baggage delivery Reliability e.g. flight punctuality

Passenger Convenience

On Board Amenities

Buy Before you Fly

Mastery – What do we

Really Need to Understand?

What additional developments would you like to see in the

airport experience by 2025?

Sense of place Make the airport/flying part of the experience

Restore the sense of glamour w/ air travel Interesting activities to occupy you

Airline Industry Scenarios

Passenger Price Sensitivity

Low

Low

High

High

Business Model Innovation

Uncharted

Territory

Paranoid

Survive

Back to the

Future

Crash and

Burn

The Ultimate in Collaboration?

Sharing of Aviation Profit Pools

T-Rays and The VIRTUS Chipset 1.5 - 2 gigabit / sec (~1000 x Bluetooth)

Enabling wireless display, mobile-distributed computing, live HD video

streaming, and real-time interactive multi-user gaming

Mobile Technology Advances are

Enabling Personalised Advertising

Muscle –

Key Survival Capabilities

Speed of Execution

e.g. Ultra-Quick Construction

Personalization

TAP Personalised

Assistance

Customer Engagement –

Deep Personalization

With airlines, airports, retailers and restaurants all wanting to

communicate with customers via their mobile devices, how

will customers respond?

I will accept information and

offers from everyone who I have

authorized

As the customer I will define the extent of the

engagement each entity can have with me

I will only accept

critical information

updates

Magic – Creating the Wow Factor

Magic – Ideas that Delight

E.g. Virtual Grocery Shopping –

Tesco South Korea

Next Gen Qantas Check-In

Message Impact, Innovation and Ethics

Revenue Models - Multiple Streams

and Pre-emptive Solutions

Conceptual Model - The airport of 2025 will most resemble?

A mini-city, separate from

its local surroundings

An extension of the

local city

A shopping mall with

runways

Bus Stop - A walkway to pass

through security

Revenue Generation Models In an increasingly uncertain economic environment with volatile fuel

prices, airports will be under constant pressure to reduce or eliminate

landing charges for airlines and fund themselves through other

commercial income such as retail and leisure.

781 respondents

0%

10%

20%

30%

40%

50%

Strongly Agree

Agree Slightly Agree

Slightly Disagree

Disagree Strongly Disagree

Leveraging Customer Insight –

What retail developments would most encourage

you to do your shopping at the airport rather than

elsewhere?

Discount outlet stores Themed retail (e.g.

reflecting local region)

Greater use of discounts,

sales and best price

guarantees

All Inclusive By 2025, to survive commercially, airports will increasingly try to be retail,

dining and leisure destinations in their own right and seek to attract non-

flying customers as well.

783 respondents

0%

5%

10%

15%

20%

25%

30%

35%

40%

Strongly Agree

Agree Slightly Agree

Slightly Disagree

Disagree Strongly Disagree

How do you see technology being integrated into your airport

shopping experience?

Multichannel – search

online, try in store, buy via

mobile

Personalized advertisements

and discounts

QR code store windows –

purchase by mobile and

collect on return / home

delivery

Collection on arrival of goods purchased from online-only retailers

Rethinking Airline Retail

Maximising the Crew

Auctioning Upgrades

Models - Continuous Innovation

E.g. Auctions

£3088 £8791.50 £81

Mindset – Customer in Control

Social Seating – KLM & Satisfly

Inflight Pop-Up Shops

Mindset – Uncertainty Tolerant, Experimental,

Curious, Sticky and Magnetic

Management - Lead or Follow?

Future Proofing the Business

Mastery Markets

Models

Magic

Management Mindset

Muscle

Message

Conclusions

• Huge untapped

potential

• Think about the ‘total

business system’

• Technology is a key

enabler

• Encourage innovation

and curiosity

• Work with and for

tomorrow’s

passenger

About Fast Future

Fast Future –

Core Services

• Live Events - Speeches, briefings and workshops for executive management and boards of governments, investment funds, development agencies , companies, airlines, airports, hotels, venues, CVB’s and associations

• Future Insights - Customised research on emerging trends, future scenarios, technologies and new markets

• Immersion - ‘Deep dives’ on future trends, market developments, emerging issues and technology advances

• Strategy - Development of strategies and business plans

• Innovation - Creation of business models and innovation plans

• Engagement - Consultancy and workshop facilitation

Fast Future • Research, consulting, speaking, leadership

• 5-20 year horizon - focus on ideas, developments, people,

trends and forces shaping the future

• Clients

– ING, ABN Amro, Laing O’Rourke

– Marks and Spencer

– Airports - Aeroports de Paris / Schiphol Group

– Vancouver Airport Services

– Industry Associations – ICCA, ASAE, PCMA, MPI

– Corporates - GE, Nokia, Pepsi, IBM, Intel, Orange,

O2, Siemens, Samsung, GSK, SAPE&Y, KPMG,

Amadeus, Sabre, Travelport, Travelex, ING,

Santander, Barclays, Citibank, DeutscheBank

– Governments - Dubai, Finland, Nigeria, Singapore,

UK, US

– Convention Bureaus – Seoul, Sydney, London, San

Francisco, Toronto, Abu Dhabi, Durban, Athens,

Slovenia, Copenhagen

– Convention Centres – Melbourne,

Adelaide, Qatar, QEIICC

– Hotels - Accor Group, Preferred,

– Intercontinental

– PCO’s - Congrex, Kenes

Hotels 2020 – Objectives

• Identify key drivers of change

for the globally branded hotel

sector over the next decade

• Examine the implications for:

Hotel strategy

Brand portfolio

Business models

Customer targeting

Innovation

• Global strategic foresight study to help the meetings industry prepare for

the decade ahead - Industry-wide sponsors

• Multiple outputs Nov 2009 – December 2011

• Current studies on future strategies for venues and destinations

Convention 2020

Rohit Talwar • Global futurist and founder of Fast Future Research.

• Award winning speaker on future insights and strategic

innovation – addressing leadership audiences in 40 countries on

5 continents

• Author of Designing Your Future

• Profiled by UK’s Independent Newspaper as one of the Top 10

Global Future Thinkers

• Led futures research, scenario planning and strategic

consultancy projects for clients in telecommunications,

technology, pharmaceuticals, banking, travel and tourism,

environment, food and government sectors

• Clients include 3M, BBC, BT, BAe, Bayer, Chloride, DTC De

Beers, DHL, EADS, Electrolux, E&Y, GE, Hoover, Hyundai, IBM,

ING, Intel, KPMG, M&S, Nakheel, Nokia, Nomura, Novartis,

OECD, Orange, Panasonic, Pfizer, PwC, Samsung, Shell,

Siemens, Symbian, Yell , numerous international associations

and governments agencies in the US, UK, Finland, Dubai,

Nigeria, Saudi Arabia and Singapore.

• To receive Fast Future’s newsletters please email

rohit@fastfuture.com

• 50 key trends

• 100 emerging trends

• 10 major patterns of change

• Key challenges and choices for

leaders

• Strategic decision making framework

• Scenarios for 2012

• Key futures tools and techniques

• Published August 2008

• Price £49.95 / €54.95/ $69.95

• Email invoice request to

rohit@fastfuture.com

Designing Your Future Key Trends, Challenges and Choices

Our Services Bespoke research; Identification & Analysis of Future Trends, Drivers & Shocks

Accelerated Scenario Planning, Timelining & Future Mapping

Identification of Opportunities for Innovation and Strategic Investment Strategy Creation &

Development of Implementation Roadmaps

Design & Facilitation of Innovation, Incubation & Venturing Programmes

Expert Consultations & Futures Think Tanks

Personal Futuring for Leaders and Leadership Teams

Public Speaking, In-Company Briefings, Seminars and Workshops

Example Projects • Public and private client research e.g. :

– Development of Market Scenarios, emerging trends and strategies for key clients

– Government and OECD Scenario Projects – e.g. Migration 2030, Future of Narcotics, Chemical Sector, Family 2030

– Scenarios for the global economy for 2030 and the implications for migration

– Designing Your Future (Published August 2008) – book written for the American Society of Association Executives & The Center for Association Leadership

– Global Economies – e.g. The Future of China – the Path to 2020

– The Shape of Jobs to Come – Emerging Science and Technology Sectors and Careers

– Winning in India and China

– The Future of Human Resources

– Exploiting the Future Potential of Social Media in UK Small to Medium Enterprises

– Convention 2020 – the Future of Business Events

– Future Convention Cities Initiative – Maximising Long-term Economic Impact of Events

– One Step Beyond – Future trends and challenges for the events industry

– Hotels 2020: Beyond Segmentation – Future Hotel Strategies

– The Future of Travel and Tourism in the Middle East – a Vision to 2020

– Future of Travel and Tourism Investment in Saudi Arabia

– Aviation and Airports e.g. Aviation 2030

Example Clients

Image Sources

Image Sources p.1

Page:

3. http://classroomtocubicle.com/wp-content/uploads/2011/01/CtoC-image-15-binoculars.jpg

4. From left to right:

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http://www.kgwings.com/hawkeye/hawkeye05.jpg

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http://www.alltop10list.com/wp-content/uploads/Big-Wave-Surfing.jpg

http://hotindiancelebrities.com/wp-content/uploads/2008/05/surya-six-pack-abs-gallery-1.jpg

http://ricotheclownandmagician.com/IMAGES/magic-hat-stars.gif

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http://www.subhub.com/custom/5ways/m3f85a9df.png

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http://blog.vavia.in/wp-content/uploads/2011/01/leadership.jpg

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Image Sources p.2

9. Clockwise:

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http://tony-ridley.com/wp-content/uploads/2011/05/travel-delay.flight-board.tony-ridley3.jpg

http://www.myplanetguides.com/images/news_pics/sacramento-international-airport-baggage-piled-high-110708.jpg

http://www.thespartanpenguin.com/wp-content/uploads/2011/01/Heathrow_Terminal_5_-_Check-in_Kiosk.jpg/

10. Top left, right; Bottom:

http://hindifilmnews.com/wp-content/uploads/2011/05/john-abraham-sky-bags-2.jpg

http://www.guenthermetzger.com/wp-content/gallery/red-cab/red_cab_24032011_3010.jpg

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13. http://www.shareyourride.net/images/Its_Never_Too_Late_To_Become_A_Surfer_Dude/Really_Big_Wave.jpg

14. Clockwise:

http://images.travelpod.com/users/rachaelwong/1.1228908900.dubai-airport-garden-thing.jpg

http://blog.cavotec.com/wp-content/uploads/2010/06/A-child-enjoys-the-slide-at-Singapore-Changi1.jpg

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20. http://images.gizmag.com/gallery_lrg/arkhotelchangsha.png

21. Left, right:

http://www.emailinstitute.com/sites/default/files/imagecache/emailgallery-medium-tmb/email-gallery/AA_17.png

http://www.americanairlines.co.uk/content/images/promos/aacom_fivestar.gif

Image Sources p.3

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23. Left top, left bottom, right:

http://www.dexigner.com/news/22673

http://www.tuvie.com/wp-content/uploads/your-life-in-2020-frog-design1.jpg

http://www.futuretechnology500.com/images/holodeck.jpg

24. Left top, left bottom, right:

http://www.vitrue.com/what-we-do/how-we-lead/custom-engagement/

http://asiancorrespondent.com/jonathan-russell-images/2010/06/media-consumption-in-thailand.jpg

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25. http://ricotheclownandmagician.com/IMAGES/magic-hat-stars.gif

26. http://www.designboom.com/cms/images/user_submit/2011/07/tescosubwaystore01.jpg

27. http://www.designboom.com/weblog/cat/8/view/11002/marc-newson-next-generation-check-in-for-qantas.html

28. http://www.arlanda-flygplats.com/en/Information--services-to/Traveller-information/News/Visit-the-Airport-Living-Lab/

29. http://www.terminalu.com/travel-news/virgin-atlantics-recording-studio-at-heathrow-airport-for-the-rich-and-famous/27576/

30. http://www.jaunted.com/files/6193/FareLockCO.jpg

31. http://www.subhub.com/custom/5ways/m3f85a9df.png

32. Clockwise:

http://urbismedia-ltd.com/html/images/kaitak-approachW.jpg

http://www.metromodemedia.com/images/Features/Issue%2021/tunnel-istock-350.jpg

http://www.aerotropolis-europe.com/images/stories/memphis/memphis2.jpg

33. http://www.airportparking.org/wp-content/uploads/2010/08/24.jpg

Image Sources p.4

34. From left to right:

http://static0.travelandleisure.com/images/amexpub/0011/3535/201003-w-outlet-gotemba.jpg

http://lh5.ggpht.com/-f5ECUYzyxno/Tp93MedokOI/AAAAAAAAVsw/2SfVF21D-uU/Luxury%252520Sale%252520Changi%252520Airport%252520Terminal%2525203%25255B16%25255D.jpg

http://img88.imageshack.us/img88/2628/man04se6.jpg

35. http://www.blooloop.com/pt/uploads/image/triotech%20800.jpg

36. Clockwise:

http://media.northjersey.com/images/1208B_TECH_BIOMETRICS.jpg

http://www.nfsrv.com/images/photos/multichannel.jpg

http://topnews.in/law/files/online-retailers.jpg

http://qrcodepress.com/wp-content/uploads/2011/02/QR-Codes-On-Wine.jpg

37. Clockwise:

http://farm1.static.flickr.com/72/173866843_0ca44b986a.jpg

http://www.maximumpc.com/files/u45851/online_retail.jpg

http://www.scottselfstorage.co.uk/dynamicdata/data/low-price-guarantee.gif

http://thisislavie.com/wp-content/uploads/2008/12/reeb1.jpg

38. Clockwise:

http://www.airlinetrends.com/2011/11/11/delta-picks-crewsourcing/

http://www.terminalu.com/europe/british-airways-cabin-crew-double-up-as-in-flight-travel-advisors/25856/

http://www.downloadcheapapp.com/appimg/54291/sas-crew-guide-screenshot-1.jpg

39. http://www.news.com.au/travel/news/bid-for-business-class-upgrade-in-auctions-on-plane/story-e6frfq80-1226392900586

41. http://blog.apex.aero/prepost-flight/airline-social-seating-system-strikes-fancy/

42. Left, right:

http://www.wired.com/images_blogs/autopia/2011/06/ana787.jpg

http://juicy.mashkulture.net/magyar/wp-content/uploads/2011/03/colette_chanel_popup_08.jpg

Image Sources p.5

43. http://3.bp.blogspot.com/_pte2XO66Nwg/SKxbGnqa6DI/AAAAAAAAB2I/g4HX25sx1MQ/s400/magnet%2Bman2.jpg

44. http://2.bp.blogspot.com/-EJhAZaiyA8E/TfRRHfKzDMI/AAAAAAAAAGo/JmTQLz1z0xc/s320/6a00d8341c65c453ef010536d4981b970c-800wi.jpg

45. From left to right top; From left to right bottom:

http://www.iwmsnews.com/wp-content/uploads/2009/05/globe.jpg

http://www.alltop10list.com/wp-content/uploads/Big-Wave-Surfing.jpg

http://hotindiancelebrities.com/wp-content/uploads/2008/05/surya-six-pack-abs-gallery-1.jpg

http://ricotheclownandmagician.com/IMAGES/magic-hat-stars.gif

http://javed-sultan.blogspot.co.uk/2010/09/world-airlines-logos-picture-gallery.html

http://www.subhub.com/custom/5ways/m3f85a9df.png

http://www.successfulaffiliate.com/images/positive-mindset.jpg

http://blog.vavia.in/wp-content/uploads/2011/01/leadership.jpg

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Background Notes

• ‘A fundamental shift in the travel industry

has provided the opportunity for travel

operators to develop new retail models.’

– Tom Douramakos, President and CEO of GuestLogix.

Source: Stock Market Review, December 2011 http://www.stockmarketsreview.com/news/226701/

Building Channels to Market • The 14th annual SITA/Airline Business IT Trends Survey (released June 2012) reveals 93%

of airlines have mobile services for passengers as a top priority investment, with 58%

investing in major programs.

• The report showed that airlines are harnessing these IT investments as a way to improve

passenger service, reduce the cost of business operations, and increase revenue.

• 58% of airlines have major plans in store for mobile services over the next three years, as an

additional 35% are investing in research and development.

• Mobile technology has transformed the way that business is being conducted in the air

industry, as more than half of airline tickets are purchased via mobile device.

• By 2015, 89% of airlines plan to adopt mobile apps as their main source of sales and

distribution.

• Also in just three short years, 9 out of 10 airlines plan to offer the following through mobile

devices: flight search, check-in, boarding passes, airfare purchase, seat selection, flight

status notification, ancillary services, customer complaint handling, and missing baggage

management.

Source: Daily Deal Media, June 2012 http://www.dailydealmedia.com/789mobile-apps-for-airlines/

Redefining the Journey

• According to a recent report by travel technology company Amadeus,

thinking laterally will be key for airlines to secure revenue streams in the

next decade.

• “Airlines will increasingly have to look beyond flight service to make money,”

says Amadeus’s Philippe Chérèque, one of the report’s authors. “The travel

experience itself, before or after the trip: there you have a lot of things to be

either bundled or added.”

• James Woudhuysen, professor of forecasting and innovation at De Montfort

University notes that “Ground transfers to and from airports could be greatly

improved for the traveller – something for which many would be willing to

pay.”

Source: Apex Aero, February 2012 http://blog.apex.aero/inflight-services-2/airlines-airports-find-creative-ways-reduce-passenger-anxiety-generating-fresh-ancillary-revenue-streams/

Redefining the Journey

• A good way to determine what kind of additional services on the ground

passengers would be willing to pay for, is to look at stress levels that air

travellers experience at the various stages of their journey.

• Research by UK retail consultants Pragma shows that as passengers make

their way to the airport, levels of anticipation and excitement rise. However,

so do levels of stress. Anxiety rises during the transfer to the airport and as

a passenger approaches check-in.

• The multiple peaks in stress levels that air travellers perceive during their

journey provide opportunities for airlines and airports to develop value

added services.

• Amadeus suggests “…this could include making airlines travel facilitators for

these customers willing to pay for seamless travel by helping arrange

baggage handling and travel to the airport and hotels. It also could include

more involvement and cooperation with high-speed rail.”

Source: Apex Aero, February 2012 http://blog.apex.aero/inflight-services-2/airlines-airports-find-creative-ways-reduce-passenger-anxiety-generating-fresh-ancillary-revenue-streams/

Moving Towards Integration

• To eliminate the nuisance of hauling luggage to the airport and checking in,

many airlines in the United States have teamed up with a company called

BAGS, a TSA-approved remote skycap service that lets passengers check

bags from their home, office, hotel, convention centre or cruise ship. The

service, which costs USD 20, consists of a document check, weighing and

sealing of the suitcases and their secure transport to the airport.

• In Europe, TAP Portugal has teamed up with Skybags, which lets

passengers check in their bags at home or the office for EUR 25.

Source: Apex Aero, February 2012 http://blog.apex.aero/inflight-services-2/airlines-airports-find-creative-ways-reduce-passenger-anxiety-generating-fresh-ancillary-revenue-streams/

Moving Towards Integration

• In Europe, airlines such as Lufthansa and Air France have agreements with

high-speed rail operators (AIRrail and tgvair, respectively) to provide

“intermodal” journeys, which combine air and train travel in one ticket. In this

way, the train effectively works as a feeder service for the airline to its hub

airport.

• Austrian Airlines and Latvian-based airBaltic, meanwhile, have launched

their own branded taxi services in Vienna and Riga, respectively. The

Austrian red|cab service provides Austrian passengers with transfers

between Vienna and Vienna Airport for EUR 29 each way. Austrian red|cab

and BalticTAXI each offer passengers a free daily newspaper, inflight

magazine and a bottle of mineral water.

Source: Apex Aero, February 2012 http://blog.apex.aero/inflight-services-2/airlines-airports-find-creative-ways-reduce-passenger-anxiety-generating-fresh-ancillary-revenue-streams/

Personal Assistance

• American Airlines has recently made its Five Star Service, launched four

years ago for celebrities and VIPs, available to the general public. The

service assigns a personal airport assistant to help passengers find ground

transportation, assist at check-in with baggage, and expedite the security

process, among other services, and is available at nine US and five

international airports. American charges USD 125 per person per one-way

flight for the service.

• A similar premium departure and arrival service is offered by Portuguese

airline TAP under the name Personalised Assistance. Prices start at EUR 45

for help with luggage, check-in, security and boarding, and for EUR 140,

passengers are also transferred to and from the aircraft in a limousine.

• De Montfort University’s Woudhuysen summarises, “Travelling can be tiring,

confusing, disjointed and unpleasant. The opportunities to build brand

loyalty – and revenues – by easing the process are still untapped.”

Source: Apex Aero, February 2012 http://blog.apex.aero/inflight-services-2/airlines-airports-find-creative-ways-reduce-passenger-anxiety-generating-fresh-ancillary-revenue-streams/

Future Demand

• GuestLogix Asia-Pacific SVP and general manager Tony Sit describeS the

new travel market in Asia-Pacific AS

• “An estimated 90 million tourists travelled abroad from Asia in 2011,

spending a collective $86 billion,”

• “In 2011, a Boeing Global Business Travel Association Survey found that

48% of Asian survey respondents are using Facebook or Twitter to plan

travel (compared with 10% of US travellers).”

• A separate survey by the Asian Travel Monitor shows that 32% of Asian

travellers will travel more in 2012 than in 2011, he notes, adding that Asia-

Pacific travellers “spend more money on average than Western travellers

do”.

• For airlines, a host of payment methods and interactive services exist today,

including kiosks, mobile apps, mobile POS, and traditional credit cards.

Source: Apex Aero, June 2012 http://blog.apex.aero/ife/asiapacific-opening-unprecedented-consumer-retail-opportunities-airlines-guestlogix/

Future Demand

• Additionally, new technological capabilities in inflight entertainment (IFE), in-

cabin Wi-Fi and destination-specific offerings are changing the way airlines

sell goods and services, and monetize the inflight experience.

• Airlines seeking to meet the needs of the technologically sophisticated Asia-

Pacific traveller must also look at future technology.

• Wallets are going digital, with Visa and MasterCard both having launched

their online digital wallet services. Consumers will be utilising digital wallets

more and more frequently, in particular when ‘on the move’

• Contactless and NFC payments are now the fastest growing payments.

Over one billion contactless cards are expected to ship by 2016. Near Field

Communication (NFC) will also have a rapid incline, with Juniper Research

estimating that one in six mobile subscribers will have this capability as

early as 2014.

Source: Apex Aero, June 2012 http://blog.apex.aero/ife/asiapacific-opening-unprecedented-consumer-retail-opportunities-airlines-guestlogix/

Providing Value and Opening

Potential New Revenue Streams • The most widely deployed iteration of social seating comes from KLM’s

“Meet & Seat” system. Meet & Seat, which lets customers link their social

network profiles (FaceBook, LinkedIn) with the airline’s seat maps, was

recently expanded to KLM’s international destinations to and from

Amsterdam, and has been utilised more than 2,200 times as of June 2012.

• Passengers can share as little or as much information as they see fit. Once

booked on a flight, they can then see who else is participating in Meet &

Seat, and start digging into the shared details on the chance they can find a

compatible seatmate on board. KLM doesn’t make the choice; the

passenger makes the choice.

• The other major player in the social seating game is Satisfly, which recently

launched its service with airBaltic. Satisfly is different than KLM’s Meet &

Seat in that the company does the research and seat selection for each

passenger.

Source: Apex Aero, June 2012 http://blog.apex.aero/prepost-flight/airline-social-seating-system-strikes-fancy/

Providing Value and Opening

Potential New Revenue Streams • “Satisfly is a sophisticated and user-friendly solution that caters to all

passengers, social and non-social,” says Jim Loperfido, marketing director

of Satisfly. “The ‘intelligent seating’ platform ensures that everyone has the

most compatible seat neighbours.”

• With each flight, Satisfly users can select a ‘flight mood’, such as ‘business

talk’ or ‘relaxation’. In addition to the flight mood, users can fine-tune the

settings for their ‘ideal neighbour’; settings include ‘belongs to your

generation’ and ‘works in the same industry’.

• Pre-launch, Satisfly says that 50 per cent of registered users selected ‘light

chat’ as their mood, 24 per cent want to relax, 20 per cent want ‘business

talk’, and only 6 per cent of users want to spend their time working on a

flight.

• While an airline is ultimately responsible for pricing, Satisfly suggests that

airlines offer the service free-of-charge.

Source: Apex Aero, June 2012 http://blog.apex.aero/prepost-flight/airline-social-seating-system-strikes-fancy/

Building the Brand in the

Terminal • Virgin Atlantic has outfitted its Clubhouse lounge at Heathrow with a

recording studio (May 2012).

• Virgin had the production suite installed for musicians, who often travel on

its Upper Class flights from London to New York and LA, the airline says.

• The idea is that artists can record tracks while they wait to board their flight

in the airline’s Upper Class lounge, where other distractions for passengers

include a multi screen cinema, spa pool and hair salon.

• The production studio also has facilities for last-minute editing.

Source: TerminalU, June 2012 http://www.terminalu.com/travel-news/virgin-atlantics-recording-studio-at-heathrow-airport-for-the-rich-and-famous/27576/

Maximising the Crew

• Airline crew are one of the most important assets an airline has. Witness

Southwest, who is actively encouraging its employees to make a difference,

and describes them as someone “who dares to make mistakes; dares to be

different; finds a way to utilize people’s special talents; and lives a little on

the edge” (examples include a Southwest pilot who held his plane so a

passenger on his way to a funeral could make it, or the airline’s famous

rapping flight attendant David Holmes).Cathay Pacific

• Airlines such as Cathay Pacific and SAS are also putting their employees in

the spotlight. Cathay’s ‘Meet the Team’ campaign has been running for

some years now – and recently took some hitting- and introduces a dozen

of the airline’s staff through profiles and behind-the-scenes stories in print

ads, YouTube videos, on Facebook, and via an iPad app.SAS

• On a similar not SAS has just introduced ‘The Face of SAS’ on Facebook,

which highlights several of its employees every week as the airline’s

Facebook profile-picture, as well as present themselves and what they do at

SAS.

Source: Airline Trends, November 2011 http://www.airlinetrends.com/2011/11/11/delta-picks-crewsourcing/

Maximising the Crew

• SAS also publishes an annual ‘SAS Crew Guide’, a ‘crew-sourced’

guidebook consisting of recommendations by SAS cabin crew and pilots for

accommodation, shopping, dining, sightseeing and nightlife in many of the

cities served by SAS. The 350-pages guide also contains 13 personal

profiles by individual crew members and their favourite cities and is sold

online for EUR15 (or 4,410 SAS Bonuspoints) as well as in select

bookshops in Scandinavia, the UK and the U.S. The New York section of

the SAS Crew Guide is also available as a free iPhone and Android

app.Delta Picks

• The latest ‘crewsourcing’ initiative comes from Delta Air Lines. As part of its

relaunched Delta Sky Store website, Delta has added a ‘Delta Picks’

shopping list to its retail program offering. The airline has asked its flight

attendants to select their best travel products in the categories luggage and

bags, cameras and electronics, clothing and accessories, as well as golf

and other sports equipment

Source: Airline Trends, November 2011 http://www.airlinetrends.com/2011/11/11/delta-picks-crewsourcing/

Maximising the Crew

• British Airways has begun trialling a new in-flight service where cabin crew

offer passengers local travel information and advice – via an in-flight iPad

app.

• One cabin crew member on select long-haul flights is now doubling as an

‘onboard travel advisor’ – helping passengers with general travel requests.

• The scope of the service includes recommendations on local restaurants,

hotels and best shopping spots, all through BA’s new iPad app.

• The free service is being trialled on nine routes and if successful, British

Airways said it will consider offering the service on more flights this Autumn.

• Air New Zealand has hired its own ‘International Concierge’ team to board

its long-haul flights and share their local knowledge with passengers –

without the use of iPads – before they reach their destination.

• Passengers can ask for advice about onward travel, rental car and hotel

recommendations, best shopping locations and local restaurants to visit, as

examples.

Source: TerminalU, May 2012 http://www.terminalu.com/europe/british-airways-cabin-crew-double-up-as-in-flight-travel-advisors/25856/

Inflight Pop-Up Shop

• Hong Kong-based inflight concessionaire ISG has teamed up with cult

French retailer Colette to launch what it calls “the world’s first inflight pop-up

shop concept” on board All Nippon Airways. The new programme will take

effect from 1 May 2012.

• The inflight ‘pop-up shop’ will feature a collection of exclusive products

brought together under the theme of Paris-Tokyo, incorporating design

elements from the classic Air Mail letter.

• Designs will be exclusive to the project, with limited quantities, and will only

be available while supplies last and for a short time period on board.

• The product range will feature in a special ‘Paris-Tokyo’ section of the ANA

SkyShop magazine.

• It will include co-branded gift products from Colette/ANA suitable for travel

such as headphones, limited edition ladies wallets with design elements

from the Air Mail envelope, and silk scarves with a special logo.

Source: Moodie Report, December 2011 http://www.moodiereport.com/document.php?c_id=40&doc_id=29378

On Board Amenities

• Korean Air topped the list for sourcing its own organic farm on Jeju Island

for in-flight meals, and for its “attentive service amenities,” including a

female-only lounge at Incheon Airport, female-only bathrooms on aircraft

and the world’s first onboard duty-free showcase.

• Korean Air's Celestial Bar - there are three onboard bars and cocktails

designed by Absolut Vodka, complete with a full-time bartender.

Source: CNN Go, June 2012 http://www.cnngo.com/explorations/escape/worlds-10-most-innovative-airlines-announced-436301

Buy Before you Fly

• In a new catering program by Austrian Airlines (A Lufthansa Group Carrier),

passengers booking economy class tickets from Vienna will now have the

opportunity to order their in-flight meals from an A-La-Carte menu from DO

& CO. Eligible flights include Long Haul and intra-European flights that

originate in Vienna (except for flights to Prague, Zagreb, Budapest and

Charters).

• For €15, passengers can now select hot or cold dishes that will replace their

normal in-flight meal (For long haul flights, this only replaces your main

warm meal).

• Passengers will now have several choices instead of the “Chicken” versus

“Beef” dilemma that most passengers are often faced with.

• The a-la-carte order can be placed online up to 36 hours before departure

to as late as 1 hour before departure.

Source: Boarding Area, June 2012 http://boardingarea.com/blogs/lufthansaflyer/2012/06/28/a-la-carte-dining-with-austrian-airlines-and-do-co-order-your-meal-before-your-flight/

Baggage Service

• Emirates launched its Baggage Delivery Service at Dubai International

Airport’s Terminal 3 in December 2011, meaning customers no longer have

to wait for their baggage on arrival. It is an initiative designed to ensure

comfort and convenience for passengers.

• Strategically positioned immediately after the immigration counters, the

service enhances the passenger experience by enabling the traveller to

have their baggage delivered anywhere in the UAE on arrival at Terminal 3.

Customers are charged AED200 (US$54) for up to four pieces of baggage,

for delivery anywhere within Dubai, Ajman and Sharjah, and AED250

(US$68) for delivery within Abu Dhabi, Al Ain, Fujairah and Ras Al Khaimah.

• An AED10 (US$3) charge is applicable for each additional piece of baggage

delivered to any UAE address. “The Baggage Delivery Service is working

very well, especially for families with children. We are monitoring how it is

performing in Dubai and will roll it out in other cities if we feel it is

appropriate,” commented Antinori.

Source: Future Travel Experience, June 2012 http://www.futuretravelexperience.com/2012/06/emirates-focus-on-baggage-delivery-and-self-service/

Open Platform for Airline Apps

• Aviation IT giant SITA has launched an open platform for app developers at

airlines.

• SITA hopes the developer.aero platform will speed up development of

mobile apps for air passengers

• It is making data on checked-in bags and mobile-boarding passes available

initially, but intends to use developer.aero to encourage app development in

other areas following an initial “incubation period”.

• SITA launched the platform at the Air Transport IT Summit in Brussels in

June 2012 and hopes to see apps emerge for self-service baggage tracing.

• Chief technology officer Jim Peters said: ‘Developer.aero is an API

[application programming interface] portal exposing data or processes to

allow developers to create solutions that companies might not have the

resources to develop or for which they might not have anticipated a

consumer need.’

Source: Travolution, June 2012 http://www.travolution.co.uk/Articles/2012/06/22/5801/sita+launches+open+platform+for+airline+app+developers.html

What Passengers Want

• Results of Airline Retail Conference (Jan-May 2012) survey.

• 22% say airlines don’t stock what passengers actually want.

• 61% would like more consumer electronis on board.

• Just 17% feel airlines are close enough to their passengers’ needs.

Source: Airline Retail, June 2012 http://www.airlineretail.com/new/wp-content/uploads/2012/06/ARC_whatpassengerswant_infographic.jpg

Outside the Box

• In 2011, ancillary revenue rose to an estimated $32.5 billion worldwide, up

43.8 percent from the estimated $22.6 billion a year earlier, according to the

Amadeus Worldwide Estimate of Ancillary Revenue.

• Airlines must learn from Amazon and “transform themselves from airline

companies to e-tailers” says Raphael Bejar, a revenue specialist at

Airsavings.

• So Air New Zealand, in what airline revenue specialists say is a first for any

airline, has ventured into banking. It is converting its frequent-flier club

members into financial services clients, giving them its OneSmart card. The

card, a debit card, stores cash as well as airline miles and foreign currency.

• “It gives us the opportunity to build a larger revenue channel, the ability to

make money from foreign revenue conversion,” said Simon Pomeroy,

director of loyalty at Air New Zealand. The airline also collects a small

percentage each time the card is used for purchases and charges a monthly

fee if the card is activated but not used. Source: New York Times, February 2012 http://www.nytimes.com/2012/02/28/business/new-airline-revenue-goes-beyond-baggage-fees.html?_r=1&pagewanted=all?src=tp

Outside the Box

• “We make money off the individual as well as the collective use of the card

every day,” Mr. Pomeroy said, pointing out that the card gives Air New

Zealand a revenue source unaffected by the tyranny of fuel prices. “If fuel

goes up, we’ll still be making money,” he said.

• In the first month after the OneSmart card was introduced in December,

100,000 people opted to activate it, a promising start, said Ben Woolsey,

director of marketing and consumer research for creditcards.com. “I can see

where this could really take off,” he said. “That’s an empowering thing for

the frequent flier to be able to access their miles instead of going online and

transferring it. It’s pretty innovative.”

Source: New York Times, February 2012 http://www.nytimes.com/2012/02/28/business/new-airline-revenue-goes-beyond-baggage-fees.html?_r=1&pagewanted=all?src=tp

Outside the Box

• Continental Airlines, which merged with United Airlines in 2011 is also taking

business ideas from the world of finance. A year ago, it began selling

options on ticket prices. The program, FareLock, lets would-be travelers

freeze a ticket price for as many as seven days by paying a small fee which

the airline keeps regardless of whether the customer ultimately makes the

purchase.

• “It’s a value to people like a stock option is a value,” said Jeff Smisek, the

president and chief executive of United Continental Holdings. It lets you buy

stock at a fixed price. Well, this is an option on a seat.”

Source: New York Times, February 2012 http://www.nytimes.com/2012/02/28/business/new-airline-revenue-goes-beyond-baggage-fees.html?_r=1&pagewanted=all?src=tp

Auctioning Upgrades

• Travellers will soon be able to bid in on-flight auctions to upgrade to business

or first class seats if they are available once they get on their flight.

• Brett Proud, from onboard retail and payment technology company

GuestLogix, said onboard auctions would be the biggest innovation on planes

in the near future.

• One Canadian airline has already adopted the concept and he was working

with two more Chinese airlines.

• "In Canada it seems people will pay double their ticket. People who paid $1000

for their ticket seem to be happy to pay $1000 to move up.

• "The good part for airlines is it's all the money they collect goes straight to the

bottom line because those seats are already empty.

• Mr Proud also said there was strong interest from airlines on broadcasting live

sports on planes, particularly to cater to male business travellers.

• "How much would somebody pay to watch their team or country play a game

live?'' he said. Source: Courier Mail, April 2012 http://www.news.com.au/travel/news/bid-for-business-class-upgrade-in-auctions-on-plane/story-e6frfq80-1226392900586?sv=e84ff5b80d1596e13996ba609f07fbd2