The way travelers explore the world has changed. They seek authentic, personalized experiences. These experiences are so important, that 87 percent are willing to exceed their budgets to get them.In the Future of Airline Distribution report, IATA noted that 88 percent of airline executives say personalization will be an important part of their distribution strategy by 2021 — which shows that they are paying attention.
Meaningful retail — that is, contextually relevant offers that speak directly to the individual traveler — is one way of making those authentic connections.
Patrick Sarkissian, CEO of travel-discovery platform Raleigh & Drake, cites a recent Skift report that noted 60 percent of bookings are made in-transit and in-destination. For Sarkissian, that represents a new opportunity to book tours, sell hotel upgrades and do other retail transactions inflight using Inflight Entertainment and Connectivity (IFEC) systems. Personalization applied through this medium, will ensure customers are approached by relevant, interesting offers only.
“The airline’s job is to create a positive experience that encourages spending,” says Purdal Mya, Director of UX and Product Management at Guestlogix, a point-of-sale ancillary revenue company. Here’s how airlines can facilitate a retail approach that honors the experiences that modern travelers want, while also expanding inflight sales opportunities.
Understanding What is Authentic to Passengers
“Personalization in the travel space comes down to: Are you able to make a recommendation based on your passengers’ lifestyle preferences? Otherwise, your recommendation is just selling,” says Matt Walker, Chief Storyteller at LikeWhere, a marketing tech firm that delivers personalized travel recommendations. If you offer a five-star hotel deal to someone who backpacks and stays in hostels, they’re unlikely to accept the offer, but someone who likes to do high-class shopping in foreign cities, would.
Learning who to make which offers to requires data-driven personalization. Collecting certain passenger information can help airlines unlock retail opportunities. “Travel brands that can capture that in their branding and give consumers access points to what’s authentic to them, are the ones that will ultimately win out,” says Walker.
“Travel brands that can give consumers access points to what's authentic to them are the ones that will ultimately win out.”
Earning Trust With Relevant Offers and Recommendations
Before making personalized inflight offers, airlines need to prove themselves as enablers of authentic travel experiences, in order to earn passengers’ trust.
An example of this is Raleigh & Drake, a Public Benefit Corporation dedicated to aggregate recommendations from local experts, enabling airlines to supply travelers with authentic travel content. Additionally, through the company’s collaboration with Panasonic Avionics, anything booked through the platform supports the local economy.
These types of thoughtful and even altruistic choices inspire positive feelings for an airline, and can foster a deeper appreciation from passengers. For instance, if an airline knows a passenger is headed to Seattle, its systems can check the local weather; if it’s raining, the airline’s companion app or IFEC screen can prompt a frequent flyer with a discounted umbrella. A contextualized offer like this can build brand loyalty.
“Airlines are now a part of the experience and, more so, they are the access to the experience that passengers are looking to consume,” says Walker.
Challenges and Win-Wins
Connectivity will be an important step in allowing passengers to research their destination and make purchases from third-party vendors inflight. “Inflight broadband connectivity is going to have a huge impact on the ancillary revenue,” says Mya.
Keeping passengers connected will be an important factor in allowing them to make purchases and maintaining an airlines’ access to the personal data required. Sarkissian says airlines are getting there. “The rubber is hitting the road now, because there’s been sort of this opening of the pipe for both mobile and also broadband inflight, which enables us to do this more relevantly.” Although connectivity is a key element, the near future does promise advances that will also enable offline purchases on non-connected flights.
More inflight revenue possibilities also mean offers tied to third-parties will be more prevalent. Some airlines might be hesitant towards sharing revenue, but Mya of Guestlogix explains why they shouldn’t be. “Onboard revenues have been pretty stagnant, even though ancillary revenues have been growing at quite a rapid pace,” he says. Airlines have a chance to fix that stagnation by tapping into those ancillary revenues through partnerships. In that way, ancillary revenue can become onboard revenue. “We see there’s a play for airlines to actually own more of that,” says Walker.
These collaborations are creating new opportunities to capture revenue from the growing ancillary segment. What’s more, the data airlines and third-parties can offer each other can help create more lucrative offers.
“We can work with the different vendors to provide a win for everyone: the passenger, the vendors, and the airlines,” says Sarkissian. And with billions at stake, it’s a win-win-win for everyone involved.