Report Finds Merchandizing Disconnect Between Airlines, Travelers
Driving ancillary revenue through merchandizing is all the rage with airlines the world over these days, and for good reason. Without the incremental revenue generated from selling optional services, many airlines may not have turned the corner and regained profitability. But according to a Frost & Sullivan report commissioned by Amadeus, there's a pretty big gap between airline interest and traveler interest in many merchandizing techniques.
"Additional services now contribute an estimated €10 per passenger globally," according to the report. "Without ancillaries, airlines would be losing money from their core seat product. The shift from providing only a core seat product to providing a variety of travel services has been slow and still has a long way to go." The "patchwork" of familiar extras offered by airlines—baggage allowances and seat upgrades, for example—are a start but a more holistic approach to improve the customer experience is needed "to meet and exceed traveler expectations throughout the duration of the journey and beyond," the report's authors concluded.
They noted that airlines are well-positioned for such an approach, as they enjoy a "huge advantage" over the likes of travel agencies and hospitality firms: Seventy-nine percent of the travelers surveyed for the report indicated they "prefer to buy services from the airline directly."
To calculate levels of interest among airlines and travelers, Frost & Sullivan interviewed executives from 15 airlines and industry experts, examined research and industry data, and conducted a survey of 306 travelers from the United States, United Kingdom, Germany, Brazil and Singapore. Of the total, 41 percent of respondents were business travelers with the rest leisure travelers (findings from the two groups generally varied by no more than a few percentage points), and 50 percent were under 40 years old.