Airlines are becoming more creative in their thinking when it comes to generating ancillary revenues and are increasingly selling additional services that passengers are actually happy to pay for, according to Guestlogix chief executive Brett Proud.
In an interview with the APEX Editor’s Blog to discuss a new onboard seat upgrade system that Guestlogix has developed in conjunction with China Southern Airlines, Proud said the solution is just one example of how airlines are thinking outside the box on the seemingly bottomless pit of new revenue opportunities.
The upgrade system enables China Southern to set a minimum bid price for unsold seats in the business class cabin. This is uploaded to Guestlogix handheld payment devices and the figure is announced shortly after take-off. Economy class passengers interested in bidding on an upgrade are then invited to raise their hands and enter their bids into the payment device.
The lucky winners can then make their way to the business class cabin, having entered their credit card details, and enjoy a bit of luxury at an average discount of 30% over booking the same seat in advance. Further details on this solution – which is currently only being implemented by China Southern but has drawn interest from other Chinese carriers – will appear in a feature in the December issue of Airline Passenger Experience magazine.
Proud says the upgrade auction solution is “a great example of new thinking in ancillary revenue” because it is “putting the decision in the hands of the passenger”. Unlike charging for hold baggage and introducing other obligatory fees that passengers often resent having to pay, there is a growing trend towards gentler, more voluntary revenue drivers which often improve the passenger experience, reducing the likelihood of resentment.
“People are less willing to complain and whine about extra fees if there is something there to enhance the passenger experience – something they don’t have to buy,” says Proud. “This is more what the travelling public is looking for.”
Proud believes that “we are seeing a lot of creativity” from low-cost carriers such as Allegiant Air, Ryanair and easyJet, and “we are slowly getting more traditional airlines along for the ancillary ride”. This creates a win-win situation in which airlines can monetise improvements to the passenger experience without drawing the ire of their customers.
“I’m happy to see airlines getting more creative – this is good for the passenger,” he notes, adding that “if someone puts something in front of me that I can choose, like new-release movies that I can access for $10, I’m going to pay the $10”.
Both China Eastern Airlines and Air China have approached Guestlogix to express their interest in its onboard seat auction solution, says Proud, but it is unclear whether this will catch on outside China. “I don’t know how this might unfold around the world,” he notes.
Guestlogix is “actively marketing” the product globally as part of its normal marketing activities. “It’s just one more thing you can sell on board, but it needs payment technology,” says Proud. “If you can’t accept all forms of payment, this service is useless.”