HONG KONG: The retail model has historically focused on finding new customers, and offering first-timers better promotions and offers than existing members. But the rise of data analytics is shifting that retail model to focus on retaining and better selling to existing customers, ultimately offering better profits and an improved passenger experience.
Some of the most innovative companies like Amazon and Netflix have already embraced data analytics and, by most accounts, are well-regarded by customers. Not so for most airlines, despite the fact that they have a treasure trove of data about passengers, including their travel habits – not to mention the opportunity to keep people captive for a few hours in-flight. At least that’s the view of onboard retail specialist GuestLogix.
During the Airline Retail Conference this week in Hong Kong, GuestLogix positioned itself as having a three-part complementary role to airlines in-flight: distributing destination content, providing analytics of all in-flight sales and doing the processing of on-board transactions.
GuestLogix says that with one airline it recouped US$2.58 million in lost sales, reduced by 10.7% excess inventory and reduced by 20.4% stock-outs. (Simple data analysis: liquor sells better on Thursday than Monday.)
Company CEO Brett Proud is most bullish about the opportunity to sell destination content like ground transportation and city guides, the latter of which he says is one of the most in-demand items not universally sold by airlines. He takes comfort in recently adding Sun Country to GuestLogix’s customer list that also includes KLM, Ryanair and US Airways.
“Destination content was the most important to them,” Proud says of Sun Country. GuestLogix created what is effectively a risk-sharing model by not charging Sun Country unless they earn revenue from the destination content.
But Proud is worried – for airlines’ sakes and his own. More agile travel industries, like hotels, are moving into destination content, expansive mobile applications and also forging relationships with customers. As that grows, airlines risk taking second-place.
The evolution of inflight connectivity is a matter GuestLogix has to reconcile with. Connectivity suppliers have shifted from supplying an Internet connection and relying on that for profits to having portals, facilitated by connectivity, that offer better hopes of returns. Streaming IFE is a big role, but so too is destination content.
In some cases GuestLogix can sell on an airline’s connectivity platform, and there is the option of selling from the gallery cart (but airlines sense already stretched crews would require cajoling), but Proud says airlines are not in complete control of what is sold. It is part of what he senses as connectivity providers over-extending their domain. “Who’s the Wi-Fi provider at Starbucks? It doesn’t matter. It’s plumbing,” he says. But he may be too late with his argument: Gogo for one is a common name around consumer travel website Jaunted, and Gogo even re-branded a few years ago with the explicit purpose to be more recognised by end users.