At the recent World Aviation Festival, Henry Harteveldt of Atmosphere Research Group shared data regarding when travelers tend to purchase various ancillary products (see above chart). Travelers on balance said that they did not want to purchase most ancillary products at the initial booking of the flight. Only the choice of an assigned seat had even 50% of travelers want to purchase at booking.
As airlines focus more on ancillary services and customer choice, they need to understand customer preferences. Offering the customer incredible choice at booking – either through scrolling through all of the options or re-bundling services into a new fare – can actually cause confusion, elongate the booking process, and drive lower customer satisfaction. Offering “the right product at the right time,” or ancillary choices at various times after the booking has already been made, might drive a simplification of the current booking process and actually drive more ancillary revenue.
Checked luggage is an interesting example of the need for better understanding customer needs and wants. Most carriers offer checked bags as a prominent option at booking – many actually attempt to incent early purchase of bags by charging higher fees post-booking. But, according to Atmosphere’s survey, less than 30% prefer to make this choice so soon in their trip planning. More than half wish to postpone the choice until check-in or day-of-travel! Airlines may be increasing take-up rate by pushing for a choice at booking – but they are not meeting customer preferences.
Airlines also tend to offer car/hotel booking links at check-in. Once again, most travelers are not ready to decide on these ancillary services so early in their travel planning. There appears to be a large opportunity for follow-on with travelers post-booking for car/hotel reservations.
Priority boarding and fast-track security are choices travelers would prefer to delay all the way until check-in. Merchandising these options in the check-in process might drive both increased revenue and increased customer satisfaction.
Finally, of course, there are potential opportunities for airlines to sell activities at the destination — entertainment, dining reservations, and sightseeing tours. These choices could be offered post-booking and pre-flight but often they are not made until the customer reaches his destination. Airlines are not typically used for these transactions …to be considered a one-stop shop for travel is sometimes set up as an objective for airlines but no U.S. airline is anywhere close to that.
Customer preferences on ancillary are not reflected in the data airlines normally collect. Airlines know when customers book various ancillary services – but with a focus on the booking process and existing incentives for customers to make their choices upfront – this obviously skews the data away from customer preferences. Ancillary take-up rates reflect the current booking process and merchandising initiatives; all take-up rates likely are depressed by excessive focus on the booking. If airlines truly seek a win-win – more choice for customer and more ancillary revenue – they need to tailor their processes for ancillary merchandising around customer preferences with respect to the preferred timing of ancillary booking.
Revenue Optimization 