AirAsia X among carriers making post-sale ancillary revenues with Optiontown

LONDON: Optiontown CEO Sachin Goel essentially used the Airline Merchandising, Ancillary Revenue and new Commercial Models conference platform in London this week to give a sales pitch for his business.

But put yourself in his shoes. You’ve been asked to talk to delegates at the Flightglobal-sponsored conference about post-sale ancillary revenues. You, too, would be hard pressed not to, if like Goel this was the very essence of your business and you were perfectly placed to talk about it.

Optiontown offers passengers “comfort traveller options” – Upgrade Travel Option (UTo), Empty Seat Option (ESo) and Flexibility Reward Option (FRo) – at a fee cheaper than booking an upgrade through the airline, and lounge access. These options can be combined.

After having marketed and sold the ticket, Optiontown can financially benefit the airline during the time between the confirmation of sale and departure time. And, according to the company, it can significantly enhance the airline’s post-sale ancillary revenues. “That’s where we come in,” he says. “We try to create a happy marriage between the airline and the consumer.”

Optiontown has a mix of airline partners from full service carriers to low-cost, regional and leisure carriers, and has established connectivity with some global distribution systems (GDS) such as Sabre and Amadeus.

Goel says airlines don’t have to take advantage of the commercial opportunity until immediately before departure when the airline knows which aircraft will be used for the flight, and how many seats are booked.

When the airline has all the information to hand it can exercise the option such as the Empty Seat Option, usually in the last couple of days or even 24 hours before departure.

“The backbone of our technical environment is called the ‘optimizer’, developed over a couple of years and is the basic platform for the products that we offer, they’re interlinked and it creates profiles of customers, and sets prices,” says Goel.

Furthermore, he says that an airline can generate 1% extra overall revenue with a single product. “If you are able to sell empty seats or reuse seats, there’s not much cost involved because an empty seat departure doesn’t cost you anything. Options are not guaranteed – if an option cannot be executed the price will be refunded to the passenger.”

As part of Goel’s presentation, he played a video of AirAsia X CEO Azran Osman Rani saying he has seen significant revenue potential after partnering with the firm.

“It brings a whole new realm of innovation and possibilities for our passengers. I like the idea because it’s simple and straightforward, and it’s truly able to generate incremental addition ancillary income that’s valued by the customer, and gets them excited and enriches their travel experience,” say Osman Rani.

“It started with an option to upgrade to our flatbed seats, and the very idea that for a fraction of the fee, by chance to be upgraded to a very comfortable seat, was very exciting, appealing and profitable. We’ve extended the concept to other products to the empty seat option which allows our guests to have all three seats all to themselves on a long haul flight.

“As we create new options it’s a multiplier because someone who is attracted by one option, there are more likely to be enticed with another. We have a whole portfolio of new option services that we’re building and the great part about this model is once the engine has been built, it integrates well, and we don’t have to do the heavy lifting with programming – it’s all done by Optiontown.”

Adds Osman Rani, “I love it, and we’ve immediately had a contribution to the bottom line; over a US$1 million in the first year and doubling in the second year. And I think we’re on track to double that again in our third year as we extend our fleet and range of options. If I had to do it all over again, I’d definitely do it in a heartbeat.”