Extra Charges Damage Brands

ap_ffpWe see headlines such as “Buyers see airline pricing biggest concern for 2015” and as highlighted in The New Yorker: “Why Airlines Want To Make You Suffer”. Consumers increasingly feel that they are getting less for their money, which means for an airline, it’s more difficult to generate increased revenues.

It has been reported that 2014 airline ancillary revenues amounted to US$2.3Billion. While this helps an airline to be profitable, ancillary revenues are perceived by consumers as being forced or extracted by “stealth”. For an airline, these extra charges damage brands. For an airport, consumer spending is characterized by low penetration and conversion rates at many airport retail and duty free outlets.

Nowadays, we are also seeing travellers make purchases online beforehand and then simply picking up the package at the airport, either departing or arrival. The flip side of this is that a traveller may actually spend less time in airport retailers — as he/she may chose instead to spend more time sipping a coffee and searching the internet on their mobiles, either for work or play.

There is some promise however, in a recent articleHow to customize travel ancillaries for enhanced customer satisfaction”. They report that “It is absolutely critical to understand a customer and his/her journey through the purchase [path], in order to best deliver additional purchase options.”

However, airlines have to reconcile their customer relationship on all customer-chosen channels. The customer wants to be recognized and treated, based on his/her relational history with their airline. This implies that all distribution systems (reservation, CRM, revenue and yield management, etc.) and check-in systems (online, mobile or kiosk) interact with each other. Although some airlines are heavily investing in this area, these interactions remain quite limited up to now.

In other words, customers first! You must be customer-obsessive, as the mobile, always-connected customer no longer tolerates an underwhelming brand delivery against a brand promise. Delivering a personalized experience can have a positive impact on overall customer satisfaction.

Our Question: How do you develop New Revenues without Damaging your Brand?