A MAGAZINE FOR AIRLINE EXECUTIVES 2011 Issue No. 1 Taking your airline to new heights SkyTeam: Caring More About You A Conversation With É Leo van Wijk, Chairman, SkyTeam Pg. 10 18 Strategic commercial planning 46 Avianca-TACA merger changed Latin 63 Merchandising through GDS gives airlines increases airline revenues America aviation additional storefront © 2011 Sabre Inc. All rights reserved. [email protected] Air Extras Empowering airlines with ancillary options Merchandising through GDSs with new technology gives airlines an additional storefront from which to market and sell products and services. In doing so, customers get what they want, when they want it. By Lauren Lovelady I Ascend Staff Photos: Shutterstock ASCEND I SOLUTIONS fter suffering through years Processed nearly three-quarters of all to different market segments and/or regions of financial losses and almost online and traditional travel agency sales of the world. It also provides an additional every conceivable cost-cutting in the United States in 2008; venue for marketing those offerings and program, carriers are evolving Accounted for 21 percent of all European generating revenues. their business models. In doing travel revenue and 47 percent of airline Once an airline has in place the internal A so, they augment fare- and bookings that same year. processes and support systems necessary schedule-led selling with merchandising In short, a GDS is a robust platform for the to introduce a new ancillary service through techniques to generate incremental revenue. wide distribution of airlines’ merchandising the Sabre GDS, it can simply file the offer - These techniques usually do not involve programs. Sabre T ravel Network ® supports ing and associated fee through the A TPCO large-scale investments but instead focus two merchandising techniques through the OC category using the standardized format. on airlines’ current and potential product and Sabre® global distribution system. The intro- Sabre Air Extras reads the filing and service offerings in relationship to consumer duction of Sabre® Branded Fares, or bundled displays the offering in the GDS. This con- demand. fares, in 2007 enabled airlines to promote sistent, user -friendly filing method greatly and “sell up” to a higher fare family with reduces the time once necessary to prepare How Was Your Travel Experience? pre-defined services included in the cost of carriers’ products and services for display An airline doesn’ t just sell a seat on a the airfare. and subsequent fulfillment through GDSs. flight; it sells a travel experience. In fact, the The following year , Sabre® Air Extras , or The enhancements also enable carriers question, “How was your flight?” can more unbundled fares, enabled carriers to offer to quickly modify their offerings in response accurately be phrased, “How was your total optional services to travelers for additional to competitors’ actions. For example, an travel experience?” because passengers’ fees plus the cost of airfare. In essence, airline may offer a premium seat in a answers usually take into consideration passengers can choose the services they specified market for a US$40 fee. However, every aspect of the trip. Of course, many value most. the competition is offering premium seats passengers still focus on getting from point in the same market for US$30. With a A to point B at the lowest possible cost. Empowering Airlines few simple clicks, the airline can almost However, others are willing to pay additional Recent enhancements to Sabre Air instantaneously adjust its price in the Sabre fees for the little extras that help make air Extras support diverse airline operations as GDS to enhance its competitive position in travel more pleasurable. well as the global airline industry by utilizing that market. These extras, or ancillary services, ATPCO’s optional services (OC) product as Fulfillment of Sabre Air Extras is done via include, but are not limited to: well as an electronic miscellaneous docu- electronic miscellaneous documents, tech- Additional legroom, ment (EMD) to facilitate fulfillment of the nology complementary to ATPCO’s filing Premium seats, optional service. services. Similar to electronic tickets, EMDs Meals, The flexible, yet standardized, format are stored electronically in the issuing air - Headphones, enables airlines to remain competitive while line’s database and detail each ancillary On-demand movies, tailoring their product and service offerings service purchased and the associated fee. WiFi access, Supervising unaccompanied minors, Pets in the cabin, Upgrades, Lounge passes, Checked baggage. Leveraging this ever-expanding array of products and services, airlines are find- ing they can differentiate themselves by bundling or unbundling their offerings. They can do so even further by charging additional fees or not collecting fees at all. The GDS: A Powerful Merchandising Tool Recent innovations in the technology that supports merchandising through global dis- tribution systems provides carriers with an additional storefront from which to market and sell products and services. This further defines consumers’ choices. GDSs are an integral part of airlines’ overall marketing efforts, which also include travel manage- ment companies, travel agents and online travel agencies. According to travel industry research authority PhoCusWright, GDSs: Powered more than US$268 billion in travel revenue worldwide in 2008 through 1.1 billion transactions, the equivalent of Enabling Travel Agents Sabre Air Extras helps agents efficiently offer complete service to their 2,100 transactions per minute; customers and fulfill special requests without the need to contact the airline during the process. 64 ascend ASCEND I SOLUTIONS Because carriers can now immediately the service were informed it was no longer their customers and fulfill specific requests process electronic bookings and payments, available. If one or two passengers decided without the need to contact the airline during trends are more easily identified and rev- at the last minute not to bring a pet onboard the process. As a result, agent productivity is enues realized earlier in the process. An but did not notify the airline in advance, both significantly increased. airline can determine why premium seats planned and potential revenues were lost. are selling well in some markets, but not in Empowering Travelers others. Empowering Agents Most airlines readily acknowledge that the Are the fees for this service too high Sabre Travel Network implemented majority of travelers seek the fastest and in those markets? Or perhaps, passenger enhancements that provide a seamless, con- cheapest way to reach their destinations. demand for this offering is not as great as sistent solution for displaying, booking and Conversely, most travelers do not rate an the demand for another service, such as now selling Sabre Air Extras to travel agents airline on price alone. extra legroom. With the enhanced filing through the GDS. Introduced in a phased With this in mind, Sabre Air Extras was capabilities, airlines can easily adjust the lev- approach to the travel agent and O TA com- designed as a one-stop shopping resource for els and fees of service offerings in individual munities, Sabre Air Extras can be accessed via travelers, giving them the ability to prioritize, markets. several touch points, including: choose and enjoy the services they value The electronic process also helps airlines City pair availability, most. The information is now readily available generate more accurate forecasts and identify Shopping, to agents in a format that is quick and easy to potentially lost revenue sources. For instance, Pricing, display, book and fulfill, allowing travelers to an airline may have a rule stating only two pets Booking, purchase these ancillaries from travel agencies are allowed in the cabin per flight segment. PNR, worldwide. Previously, when a passenger booked a Fulfillment. flight and requested to bring a pet onboard, Prior to the enhancements, travel agents Simple Steps a message was placed in his or her itinerary and OTAs could view services and fees filed It’s simple: travel agents and OT As can’ t noting the request. This was the case even by airlines but were unable to fulfill pas- sell what they can’ t see, and travelers can’ t though the service fee was not collected until sengers’ requests or collect fees in advance. choose if they don’t know they have a choice. the traveler arrived at the airport. Today, Sabre Air Extras provides agents with Whether an airline offers a wide array of ancil- Once the two pet-in-cabin limit per flight was the content and automated tools necessary lary products and services with varying fees reached, subsequent passengers requesting to efficiently provide end-to-end service to for different market segments, simply charges a flat US$25 for every checked bag or even chooses to provide these services at no extra cost to customers, Sabre Air Extras provides a valuable channel for carriers to differentiate themselves from the rest of the playing field and realize additional revenues earlier in the game. Even if a carrier’s merchandising roadmap is not fully implemented, Sabre Travel Network will partner with an airline to begin selling ancillary services one step at a time. With the standardized, flexible filing capabilities of Sabre Air Extras , a carrier can continue to develop and diversify its plans and easily add services as they become available to remain competi- tive. Even the smallest steps can lead to great results. a Giving Customers Choice While many airline customers simply focus on getting to their destinations, Lauren Lovelady can be contacted a good portion are willing to pay for extra amenities such as lounge access. at [email protected]. ascend 65.