New airline ancillary revenue management strategies

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Airlines have different customer segments and different network structures. Therefore ancillary products and marketing strategies have to take this into account and need to be tailor-made to fit with the customer’s needs, their buying behaviour and their willingness to pay.

Saravanan Ramasamy, Group Head Distribution & Ancillary Commercial of AirAsia and Andrew Cowen, CEO of HK Express joined us at the Aviation Festival Asia in Singapore in February 2016 to discuss how they identify and utilise ancillary opportunities in their businesses.

HK Express
HK Express is well known for unique ways of finding and utilising ancillary revenue sources. They have grown their ancillary revenue from zero to 23% over the last two years. Andrew admits that sometimes LCCs can become their own enemy by having too many offers and too many fees, hence, the focus needs to be on a very disciplined offer. Andrew sees ancillary as the way to add richness (seats, meals, baggage) to LCCs simple offering, which gives them an advantage of offering customers to choose and pay only for the services they need opposed to FSCs.

HK Express has recently launched Ufly-Pass allowing fans to take full advantage of the airline’s many sales and promotions by subscribing to the brand new exclusive service. The Ufly-Pass allows subscribers unlimited, 6-hour early access to sales and promotional deals for a subscription fee.

HK Express has also formed the World’s First Low-Cost Carrier Alliance currently comprising four LCCs: HK Express, Lucky Air, Urumqi Air and West Air. “With the launch of the first LCC alliance in the world, we are entering into a new era of travel that speaks to what travellers really want: flexible and affordable routes that are also safe and secure,” said Andrew Cowen. “Thanks to the cooperation from the innovative low-fare airlines, we are able to connect travellers from Asia and Greater China to an ever-increasing network of cities.”

HK Express is also focusing on making use of data to advance their personalisation offering and on the opportunities presented by dynamic pricing.

AirAsia
AirAsia is another airline to watch when it comes to identifying and realising ancillary revenue opportunities. AirAsia offers their passengers an opportunity to choose seats, add a meal or a travel kit for an additional fee. They have been studying the patterns and data of what extras most passengers need and taken a step further with Value Pack – bundling of a selection of pre-book add-ons which the guest can purchase at the time of the initial booking at a discounted rate. These add-ons are 20kg checked baggage, a meal and pick a standard seat. Despite introducing the Value Pack, Saravanan believes in keeping the a la carte available to passengers as well to allow them to choose what they really need for their journey. 

What are good ancillary revenue ideas that you have heard of? Let us know in the comments. Then join us next February in Singapore for the Aviation Festival Asia 2017 to see how much the ancillary revenue landscape has changed.

 

photo credit: Sinéad McKeown

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