In recent years, both emerging and time-tested travel companies—like Airbnb and its super-successful offering “Experiences”—have started looking at ways to coordinate broader aspects of their customers' travel plans.
Airlines are no exception. In an effort to streamline and personalize travel experiences, airlines are stepping out of their old role as strictly flight operators, and into a new one that is designed to allow them to redefine the total passenger experience.
This new role enables airlines to help passengers book ground transportation, discover last-minute hotel deals, and shop for destination experiences. Airlines are accomplishing this with technology already at their fingertips: The Inflight Entertainment and Connectivity (IFEC) ecosystem.
“We at Eurowings have identified IFEC as a great opportunity for inflight shopping and personalized offers," shares Eurowings’ IFEC Product Team. “Panasonic's IFEC systems are important customer touchpoints for us to promote our brand, as well as partner offers."
While it's true that IFEC may be the cornerstone of any elevated travel shopping experience, it takes more than a Wi-Fi connection and a seatback screen to make these marketing opportunities count.
To unlock the true value of new ancillary models, it takes a robust ecosystem to seamlessly coordinate marketing, retail, payments, and delivery.
“Tours and activities will be the next ancillary revenue frontier for airlines," concludes Patrick Sarkissian, CEO of travel-discovery platform Raleigh & Drake. “But they need to build a product based on an interactive platform with curated content, delivered across the entire customer journey in a highly-personalized format that invokes emotional engagement."
Enabling non-locals to sell 'local' experiences
Travelers tend to book the logistical part of their trips—flights, hotels, etc.—in advance, but like to leave room for spontaneity when it comes to their day-to-day vacation experiences. That's why local travel-experience providers do so well: They're intimate, low-risk, and they have high potential to offer a truly unique experience.
The rise of Instagram as a travel-inspiration app has also influenced people's destination decisions, and has helped make trips to remote parts of the world more attractive and attainable.
Airbnb was early in trying to capitalize on this trend. In 2016, it launched Trips and inspired travelers to "live there" via its new Experiences offering. It also provided new tools to peruse and book restaurants. These new options have seen incredible growth since then, with Experiences gaining 2,500 percent more sales in 2017.
This effort consolidated travel-experience offerings that had previously been difficult to coordinate before arriving at a destination. It opened many online travel agencies' (OTA(s)) eyes to the possibility that consolidation of travel platforms was not only possible but that travelers were demanding it.
New ancillary frontier for airlines
According to Phocuswright's report Tours & Activities Come of Age: The Global TravelActivities Marketplace 2014-2020, 40 percent of bookings happen within two days of a trip.
Airlines may be able to offer their collaborating service providers the perfect environment to sell the complete travel experience by developing mobile applications that assist customers in shopping for tours at any time before—and during—their trips.
Think of it this way: An airline companion app could enable a traveler to book their airplane ticket and hotel months early, their tours two weeks ahead, and their destination ground transportation two hours before arriving—all in one place. This app could be used on any connected device, including aircraft's seatback screens. All it takes is a login to let the customer pick up where they left off.
Airlines are in a position to own more of the travel experience, by virtue of the fact that they have their passengers' attention for many hours at a time, and that they already have important information about their customers' trips. This is why they are favorably positioned to market highly personalized offerings that travelers will actually want to buy.
“With 60 percent of travelers booking their in-destination activities en route to a destination, IFEC is a very meaningful and captive portion of the trip," surmises Sarkissian from Raleigh & Drake. “Given the rich media experience possible with modern interactive IFEC screens, airlines could facilitate bookings in a meaningful way that might change inflight passengers' behavioral patterns."
Tapping into this market can be a great potential source of ancillary revenue for airlines. However, Sarkissian goes on, selling the complete travel experience requires a special touch. “Simply delivering TripAdvisor, or something easily obtained via Google, isn't the way to go," he explains. “There must be a value-add for the traveler."
"We at Eurowings have identified IFEC as a great opportunity for inflight shopping and personalized offers. The Panasonic IFEC systems are important customer touchpoints for us to promote our brand, as well as partner offers”
Connectivity rates are a challenge to overcome
We know about the opportunity—but what about the pitfalls?
“Destination marketing for an airline is tricky," said Tamas Hanyi, Finnair's General Manager, APAC region, in his recent interview with Phocuswire. And there is a good reason why.
Presuming people are creatures of habit, buying travel onboard is not something they are accustomed to doing. “Customer behavior may present a challenge," says Sarkissian.
Passengers have different ways of entertaining themselves onboard. Flipping through a book, watching the latest blockbuster, or working on a laptop are common activities in all cabins, from Business Class to Economy.
Traditionally, booking travel has not been one of these activities. However, this can change with airlines bringing around affordable high-speed onboard connectivity.
“The lack of take-rate of Wi-Fi (presently five percent across the industry when airlines charge for it) is hampering the ability for live bookings," says Sarkissian.
Eurowings' IFEC Product Team agrees. “Currently, the technology on our long-haul fleet does not allow any real-time exchange between the IFEC and the ground. As long as IFEC systems are working as our own 'non-connected environment,' we are facing the challenge to keep the systems up-to-date with real-time information and partner offers."
Sarkissian believes this will change in the coming 24 months as more airlines understand the relationship between inexpensive—or better yet, free—inflight connectivity and ancillaries.
For these new ancillary models to succeed, airlines will need to change their customers' mindsets by better aligning themselves as end-to-end travel partners. Robust, reliable inflight Wi-Fi is an incredibly important step in making this happen.
“Having a real-time connection between the IFEC screen and the ground would help a lot selling complete travel experiences," says Eurowings. “With that functionality, passengers could check real-time availability and book all kinds of services, be it car rentals, hotels, or local tours and adventures, just like they would do at home or a hotel."
When airlines use connectivity to do more with what they've got, the passenger wins.
Learn about Panasonic's NEXT Online offering here.