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Maximizing ancillary revenue - The power of analytics for airlines

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Revenue from non-ticket sources or ancillary revenue is critical for airlines in the current environment. With booking volumes through travel agencies predicted to decline by 2021, it is even more important for airlines to maximize their ancillary revenue through this channel. The launch of New Distribution Capability (NDC) thus comes as a boon for airlines as it will improve communication between airlines, travel agents and travelers. This increases the opportunity for airlines to sell their ancillary products and services, and enhances the scope for personalization as well. It thus improves their chances of capturing a large portion of the predicted USD 130 Billion ancillary revenue market by 2020.

Analytics will play a major role in helping airlines glean valuable insights on customers' purchase and spend patterns on ancillary products and services by leveraging the data extracted from bookings made directly from airline websites. Airlines can accordingly push customized ancillary products and services when a search is made through travel agents.

In order to customize ancillary products, airlines could take a page out of other service industries’ playbooks and adopt innovative strategies to gauge customer behavior and needs. This will allow them to personalize the experiences they offer.

This WNS DecisionPointTM report outlines the following strategies for airlines to generate more revenue from ancillary products and services:

Comprehend Your Customer Framework to evaluate the underlying behavior patterns of customers to generate offers
Ancillary Revenue Maximization Matrix to segment customers based on their likely future behavior and offer ‘preference-based’ ancillary products
For a closer look at how to maximize ancillary revenue, read the full report at:

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Maximizing ancillary revenue - The power of analytics for airlines

  1. 1. 00 Wnsdecisionpoint.com wnsdecisionpoint.com Maximizing Ancillary Revenue The Power of Analytics for Airlines
  2. 2. 11 Wnsdecisionpoint.com 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 on Overall Passenger Satisfaction 48.4 42.8 5.6 Source: IdeaWorks Company, Travelport, Amadeus, WNS DecisionPoint™ Analysis Source: Airline Passenger Experience Association
  3. 3. 22 Wnsdecisionpoint.com 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
  4. 4. 33 Wnsdecisionpoint.com Airlines need to better package ancillary offerings irrespective of sales channels Pre-NDC Post 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.
  5. 5. 44 Wnsdecisionpoint.com 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
  6. 6. 55 Wnsdecisionpoint.com A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions. Email: perspectives@wnsdecisionpoint.com Website: wnsdecisionpoint.com @WNSDecisionPt WNS DecisionPoint WNS DecisionPoint