This cover for position only – need cover with correct title. Issued 08 November 2016 Top Merchandising Innovations to Delight Air Travelers and Boost Profits IdeaWorksCompany explores how airlines are becoming better retailers. Contents Great retailers know they must continuously evolve ....................................................................... 4 Merchandising will grow in complexity ................................................................................................. 4 Asia’s Value Alliance integrates booking among 8 budget carriers ................................................ 5 Jazeera moves airport check-in to a valet parking lot ....................................................................... 7 AnadoluJet’s transfer service starts the journey at your home ...................................................... 8 Emails reveal consumer interests and behavior .................................................................................. 9 Remarketing brings customers back to the store ............................................................................ 11 Vueling’s Pending Passenger holds a companion seat without a passenger name .................... 12 American follows Qantas with more credit card choices .............................................................. 13 Branded fares encourage consumers to upgrade their experience ............................................. 15 “Without promotion, something terrible happens . Nothing!” ................................................ 16 The free distribution of this report is made possible through the sponsorship of CarTrawler. CarTrawler connects business and leisure customers and online travel retailers with more road and rail transport solutions than they will find anywhere else. 95 international airlines and 2,000 travel retailers around the world trust CarTrawler to provide their customers with real-time access to over 1,600 leading and independent car rental agents, coach transfers, rail networks and chauffeur drive services at 43,000 locations in 195 countries. By satisfying customer demand for choice and convenience, CarTrawler consistently delivers profitable growth for its partners. For more information, please visit www.cartrawler.com Issued by IdeaWorksCompany.com LLC Shorewood, Wisconsin, USA www.IdeaWorksCompany.com Airline Merchandising Innovations IdeaWorksCompany.com LLC © 2016 Page 1 Airline Merchandising Innovations IdeaWorksCompany.com LLC © 2016 Page 2 About Jay Sorensen, Writer of the Report Jay Sorensen’s research and reports have made him a leading authority on frequent flyer programs and the ancillary revenue movement. He is a regular keynote speaker at the annual MEGA Event, spoke at IATA Passenger Services Symposiums in Abu Dhabi and Singapore, and has testified to the US Congress on ancillary revenue issues. His published works are relied upon by airline executives throughout the world and include first-ever guides on the topics of ancillary revenue and loyalty marketing. He was acknowledged by his peers when he received the Airline Industry Achievement Award at the MEGA Event in 2011. Mr. Sorensen is a veteran management professional with 30 years experience in product, partnership, and marketing development. As president of the IdeaWorksCompany consulting firm, he has enhanced the generation of airline revenue, started loyalty programs and co-branded credit cards, developed products in the service sector, and helped start airlines and other travel Jay, with son Aleksei and daughter Annika, in North Cascades National companies. His career includes 13 years at Midwest Park in Washington. Airlines where he was responsible for marketing, sales, customer service, product development, operations, planning, financial analysis and budgeting. His favorite activities are hiking, exploring and camping in US national parks with his family. About Eric Lucas, Editor of the Report Eric Lucas is an international travel, natural history and business writer and editor whose work appears in Michelin travel guides, Alaska Airlines Magazine, Westways Magazine and numerous other publications. Founding editor of Midwest Airlines Magazine, he is the author of eight books, including the 2013 Michelin Alaska guide. Eric has followed and written about the travel industry for more than 25 years. He lives in Seattle, Washington, where he grows organic garlic and heirloom corn; visit him online at TrailNot4Sissies.com. Eric, at his favorite summer retreat, Steens Mountain, Oregon. Disclosure to Readers of this Report IdeaWorksCompany makes every effort to ensure the quality of the information in this report. Before relying on the information, you should obtain any appropriate professional advice relevant to your particular circumstances. IdeaWorksCompany cannot guarantee, and assumes no legal liability or responsibility for, the accuracy, currency or completeness of the information. The views expressed in the report are the views of the author, and do not represent the official view of CarTrawler. IdeaWorksCompany does not have a client relationship with the companies featured in this report. Airline Merchandising Innovations IdeaWorksCompany.com LLC © 2016 Page 3 Top Merchandising Innovations to Delight Air Travelers and Boost Profits Great retailers know they must continuously evolve US Supreme Court Justice Oliver Wendell Holmes, Jr. said: “Greatness is not in where we stand but in what direction we are moving. We must sail sometimes with the wind and sometimes against it − but sail we must and not drift, nor lie at anchor.” The words spoken by this man, who was born in 1841, do have a timeless quality. His advice also aligns with the process of natural selection. Organisms must evolve to meet changes in the environment or risk extinction. This report reviews how retail-oriented airlines are in continuous pursuit of what works and discarding what no longer Oliver Wendell Holmes, Jr. sells. As Justice Holmes advises, airlines which needlessly cling to served on the US Supreme Court from 1902 to 1932. tradition will find themselves adrift with competitors sailing past them. The world of commerce rewards retailers who adjust the mix of product, pricing, and promotion to stimulate consumers to spend more. In a sentence, that’s the definition of merchandising. Merchandising will grow in complexity Distribution styles have traditionally been defined by airline type. Low cost carriers focused on their websites and excelled at tempting leisure passengers with optional extras. Global network airlines were busy selling travel through multiple channels and yet made little progress on a la carte sales through global distribution systems. The last five years have seen these traditional boundaries blurred by the expansion of mobile technology, metasearch sites, direct connect, and enhanced GDS capabilities. We now find Ryanair having a far larger array of a la carte services sold through GDS than British Airways. Ryanair can sell checked bags, medical assistance, special baggage, seat assignments, and priority boarding through agencies, while British Airways offers none of these. Spirit Airlines relies on a single Bare Fare and SWISS now offers a choice of three branded fares. The continuous search for new revenue opportunities – when combined with the power of new technologies – ensures these disruptive behaviors will continue. Airline Merchandising Innovations IdeaWorksCompany.com LLC © 2016 Page 4 We are in an era in which airlines have the technological freedom and the willingness to dismiss tradition and seek seemingly limitless revenue opportunities. This report provides a wide variety of examples − covering traditional airlines, low cost carriers, and suppliers from all over the world – to demonstrate unique methods to generate more revenue from the sale of tickets and ancillary revenue activities. Asia’s Value Alliance integrates booking among 8 budget carriers Global airline alliances have been around for nearly 20 years since the founding of the Star Alliance as the first worldwide grouping in 1997.1 These global networks don’t generally include low cost carriers, so it’s not surprising LCCs opted to create their own. On 16 May 2016 eight low cost carriers announced the formation of the Value Alliance: Cebu Pacific, Jeju Air, Nok Air, NokScoot, Scoot, Tigerair Australia, Tigerair Singapore, and Vanilla Air.2 The group serves more than 160 destinations across the Asia-Pacific region and carried more than 47 million passengers at 17 hubs. The alliance was created to compete with network airlines and non-aligned LCCs. AirAsia, with its own pan- Pacific network and traffic of 45+ million passengers, is notably absent from the alliance. This is not an alliance in the style of Star or oneworld, but rather a platform allowing All together now: Value Alliance members provide access to more than 160 individual airlines to choose destinations across the region, covering a third of the world. how to interline with other members of the alliance. Guided by a low-cost heritage, this alliance won’t feature a central headquarters staff and a global advertising campaign. Instead, the Value Alliance has largely been enabled by a merchandising platform that allows the sale of connecting flights, optional extras, and product bundles between member airlines. The development of this technology has been a significant undertaking and is the responsibility of the intriguingly named “Air Black Box Limited” based in London. The company has filed