Low-cost carrier airBaltic pushes the envelope with unique ancillary revenue offerings

European low-cost carrier airBaltic’s VP corporate communications, Janis Vanags, is known on the airline conference circuit as being quite a character.

He clearly stands out from the crowd, and had everybody sitting up straight listening to him last week during the Flightglobal ‘Airline Merchandising, Ancillary Revenue and New Commercial Models’ conference in London.

Everyone, including me.

Vanags shared his thoughts about airBaltic’s experiments in selling products to passengers that are outside traditional ‘a la carte’ items that generate ancillary revenue.

One experiment saw airBaltic sell real estate in-flight.

During the lunch break I spoke to Vanags to find out why on earth an airline would sell real estate.

“A lot of wealthy Russians come to Latvia because it has beautiful white and wide beaches, longer than Rio de Janeiro’s Copa Cabana beach and property more expensive than the French Riviera,” explained Vanags, noting that many of these Russians were buying up the properties so it made sense to sell them in-flight.

However, noted Vanags, whilst selling real estate was an experiment – as are all airBaltic’s new product promos – the concept was introduced “with a healthy dose of irony because we were selling castles in the sky”.

He added: “We were happy for the net positive gain. The partner, the real estate company were very happy, but we felt it was a little too far fetched for what we do, and so we decided to drop this product.”

Though it is eager to try new things airBaltic is equally prepared to cease offering products it determines do not “fit with the brand”.

For airBaltic, 2012 has been a breakthrough year, according to Vanags. The carrier’s non-airline revenues grew 300% and it entered new markets (Olbia, Italy is among its latest additions). The carrier – a major player in the independent BalticMiles loyalty programme – has also teamed up with 100 additional partners.

As a smaller airline, Vanags boasts that its innovative approach to the industry allows it stand tall amongst other larger players like Qatar, KLM and Air Asia.

The carrier’s new aircraft type, the Bombardier Q400 NextGen turboprop, has its own personality and naturally therefore would have its own Twitter handle: @TweetingPlane, which told followers in July 2011: “After the pilot has taken me up at approximately 7.6km height, I am allowed to fly on my own until the landing – ain’t that great?”

The airline has started an experiment with the Q400 using satellite-guided operations and “so-called continuous descent” and Vanags said that “when this green flying is fully rolled out into our operations we will have a savings of about $1m annually, so with three million passengers, this is about 70 euro cents per passenger. It’s quite nice because this is money that matters. We’re getting recognition for being one of the top airlines for innovation. This gives us a rewarding feeling.”

Analysing the airline’s data, Vanags observes a trend in the region of CIS Russia where customers tend to book airBaltic flights outside of the carrier’s web site. Traditionally, customers [from the region] use the services of travel agencies, he says.  “Quite a lot actually. 50%, and of these people, 10% come to our site to buy our ancillary services. They’ve read about it in the news and are well aware of it. This is a remarkable number.”

While the airline’s 2012 figures are not yet finalised, Vanags says it’s performance is much stronger than 2011 and even stronger than the initial plan for 2012 and he asked to be invited back to the conference next year to talk about the results of the airBaltic innovations currently in the pipeline.

(Photo above and main courtesy of AirTeamImages.)