Take from tickets just part of profit -Mezzo Movies
posted on
Oct 31, 2006 07:36AM
Take from tickets just part of profit
They call it “ancillary revenue”: the income derived by airlines from anything but ticket sales.
I have other names for it.
You may have seen those TV commercials in which an attendant with an attitude offers passengers blankets and pillows for a fee. Several airlines aren't far from making that sarcastic scenario a reality.
One discount airline based in Asia already charges for blanket “rentals.” It has been reported to the World Low Cost Airlines Congress that when blanket fees sag, flight attendants get commissions on blanket rental ask the pilot to turn up the air conditioner.
They call it a way to increase the bottom line. I call it the bottom rung of customer service.
Of course, I as well as you must become accustomed to the new ways airlines do business. If you think it's a case of nickel-and-diming, think again. The stakes are much higher.
One way they're doing it is with something called “dynamic packaging.” When you pay for a package that includes air fare, accommodations, auto rental and/or travel insurance, the airlines make extra cash.
Some airline Web sites offer special services such as bank loans and insurance sales. The airlines get advertising revenue and perhaps a cut of every deal that is made.
Advertising has also generated big bucks for some lines, which sell ad space on overhead bin covers and tray tables. One airline has also sold advertising patches on its flight attendants' uniforms.
One airline makes really big bucks selling advertising space across the fuselage on the outside of the plane.
Look for an airline to offer advance ordering of branded foods that will be served (for a charge) during the flight.
Some airlines which will get a cut of the international roaming or text-messaging fees are outfitting their fleets to allow the use of cell phones and PDAs during flights.
Have you heard about the airlines that will charge customers for airport counter check-in? You will. Ditto for airlines charging extra for assigned and preferential seating.
Major airlines already have major membership fees for their airport lounges. Many low-cost lines are opening fee-based lounges to be run by private contractors.
And then there's gambling: Ireland-based Ryanair already sells scratch cards to passengers. It will soon offer full-fledged gambling on board, to be played on mobile phones and/or broadband Internet.
At a recent conference of smaller airlines, members heard success stories. EasyJet reported an ancillary revenue increase of 31 percent in the last six months. That non-ticket take represented eight percent of total revenue.
Some airlines have hired what they call “Ancillary Revenue Managers” who are charged with coming up with products and services that will bring in those extra dollars.
The principle is simple, similar to what cruise lines have always done. The ship (plane) is filled with hundreds of passengers with nothing to do but enjoy (endure) the cruise (flight). It is an untapped and lucrative market.
Mezzo Movies CEO Dave Sampson, who led a workshop at the airline conference, has worked in retail and mobile phone marketing. He now sells hand-held entertainment devices that are rented on airplanes.
He told the airline managers, “You have your customers trapped in your shop for at least two hours. Now, what are you going to sell them?”
Remember the last time you went to a movie? What did you pay for the ticket? What did you pay for popcorn, candy, and a soda?
Think about it.