AIX AMERICAS 2014: Airlines are behind the power curve when it comes to retail

According to speakers during the Aircraft Interiors Expo (AIX) Americas in Seattle, airlines are woefully behind the power curve in doing in-flight retail.When asked if airlines are mining data from the internet sites such as Facebook and Amazon to create the personalised experience they say they want to do, Novo IVC operations director, Jon Hall, said unequivocally, they are not. Nor are they mining their own data about passenger likes and dislikes on-board their own aircraft.“Merchandising is very mature on the ground but not in the air,” said Priti Arora, senior product line manager, systems, Thales In-flight Entertainment and Connectivity. “It is all about what the passenger expects and what they expect is the same experience in the air as on the ground. On-board retail has grown 15% in the past year to $31.5 billion and is projected to grow 18% to $46.2 billion this year.”Arora noted passengers now are demanding self-serve systems which, for Walmart, saves $12 million per second and allows labour to be reassigned to enhance the customer experience. “That is a 7% revenue increase per labour hour and an additional 150 labour hours redeployed,” she said. “That means passengers can pre-order and flight attendants won’t be in the aisle to take and then deliver orders. Flight attendants could be redeployed to the passenger experience with a tremendous impact on customer satisfaction and efficiency.”Passengers have already addressed the privacy issue by opting in to the personalisation of their buying and travel experiences.It is interesting that one of the prime airline retail vendors – GuestLogix – tapped a retailer to head its effort. Last year it hired former JC Penney executive Nancy Love as senior vice president of global marketing. That suggests airlines should look to the retail industry to head its in-flight sales operations.Love indicated that in 2010, airlines achieved $8 per passenger in ancillary revenue. Today, it is over $14 and projected to grow to $16.

“There is more opportunity to make that grow,” she said.“Passengers are buying seat upgrades, food, beverages, destination activities and airlines could entice passengers to buy on board by offering discounts that would shift the money spent with a hotel concierge and bring it on-board.”Love indicated that airlines could create much more revenue by creating a “walled garden,” an airline internet portal through which passengers can do their shopping.Hall agreed and suggested airlines are not capitalising on the fact that, for the passenger, shopping on-board is part of the flying experience.

“There is so little done to get the passenger to buy on-board,” he said. “Passengers don’t even know it’s available. Airlines need to push out information about buying on-board, in-flight entertainment, ordering food. This would mean, if airlines make it part of the booking experience, they could have more accurate stocking and save significant weight. Additional revenues could be had from selling advertising to those trying to reach the captive passenger.”Kathryn Creedy, reporter, Inflight / Inflight-Online.comSeattle, USA

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