Rohit Talwar The Future for Airline Retail - ARC London 30 June 2011 handout

The Future for Airline Retail in a
Decade of Change
Airline Retail Conference
London
June 30th 2011

Rohit Talwar
CEO - Fast Future
rohit@fastfuture.com
www.fastfuture.com

Contents

Presentation p3
Background Notes p 46
About Fast Future p 80
Image Sources p 89

Where’s the Growth?

Passenger Share of Extending
Conversion? Wallet? Relationships?

…Thinking is Back in Fashion

Transformational Change?
It’s Only Just Begun

Demographic Destinies
2 billion more people in 40 years –
Demographics is Driving Economics

448 739 691 5231
344

1998 4157
729 1030
585

2010 2050 Source : United Nations

Life Redefined –
Lifespans are Increasing
Under 50’s have 90%
chance of living to 100.

Aubrey de Grey suggests
we could live to 500 or 1000

What are the health,
consumption and resource
implications?

What kind of opportunities
will be created?

Millions of Asians with $3,000
Disposable Income
1000 945
900

800

700

600 570
500

400

300

200

100

0

2010 2015

Asian Consumer Spending -
$32 Trillion by 2030?

TMT – Convergence and Immersion

Telephony Connectivity
• Voice • Cellular
• Messaging • Up to 14 bands
• SIM card • WLAN/BT
• Phonebook • GPS
• Ring Tones • NFC
• Security • FM

Data/ Multimedia
Enterprise • Camera 8-16M
• Camcorder
• 100Mbps
• 24M Color Display
• Email
• Memory (160GB)
• IMS
• Multiformat A/V
• Browsing
• HD Video/TV out
• VPN
• Games
• PIM
• Ecommerce
Software (50-100M Tps)
• Protocols • DRM
• Payments
• Middleware
• Applications
• User Interface
• Minimize fragmentation

Intensified Global Competition

Today - US – 3 Seats per head / China 0.3 / India 0.1
Asia – a third of all flyers (2013) and travel spend (2020)

Redistribution of Aviation
Profit Pools

Catalog Extension
Kurt Geiger

Duty Free Innovation: Entertainment

The Future –
From Cabin to Cash Register

Integrating Physical and Virtual

Daily Social Media Offers e.g. Twitter

Passenger Centric
The Virgin Red Store

Single swipe ‘open tab’

Partner Tie-ins
Pullman Bangkok King Power Hotel

Rethinking the Experience
e.g. Korean Air

Tie-ins with Airport Retail
e.g. Booking / Boarding Pass Offers

Attracting Brands
e.g. Virgin / Courvoisier

Outsourcing In-flight Duty Free
e.g. BA / Tourvest

Conclusions

• Huge untapped potential

• Technology is a key enabler

• Encourage innovation

• Experiment

• Work with the value chain

The Future –
• The Airline Weekly GXI Onboard Retail Benchmark 2009, the world‘s largest
collection of aggregated data for onboard retail sales, has been released.
• Onboard retail service can mean very different things depending on where a
carrier is based. According to the benchmark analysis, while North American
carriers have shifted their models to selling food, drinks and so-called
comfort items—blankets, pillows, headsets etc.—the Asian market remains
resistant.
• Only 10% of passengers boarding Asian carriers can purchase food or
beverage on board. That figure compares with 68% in the Americas. In
Europe, the Mideast and Africa (EMEA), 32% of carrier traffic has made the
leap.
• The numbers are almost opposite when it comes to duty free sales. In Asia,
74% of carriers have a duty free onboard retail component on their
international flights. In EMEA, it‘s 79%. In North America it‘s only 54%. Note
that these numbers are weighted on total passengers and duty free
offerings only apply to international flights.
Source: Airline Weekly, February 2010 http://www.airlineweekly.com/AWSR1.pdf

The Future –
• Apparently it‘s tough to squeeze an extra dollar out of a passenger. Across
the industry, the average carrier with an onboard retail component (that is,
selling any combination of food, beverage, IFE, and comfort items) earned
$.72 per passenger in 2009.
• However, when looking at carriers in the top 10 percentile, that average
climbs to nearly $2. What are the top performers doing differently?
• Industry wide, 6% of buy-on-board sales are from soft drinks and other non-
alcoholic beverages such as juice, water and coffee. Among top performers,
the number rises to 31%. When looking at beverage sales only, top
performers earn more than three times the industry average of $.29. The
key factor, according to the report, is that top performers are charging for
non-alcoholic beverages.

Source: Airline Weekly, February 2010 http://www.airlineweekly.com/AWSR1.pdf

Leveraging Wi-Fi
• Row 44 provides inflight broadband connectivity for the passengers, cockpit
and crew of commercial aircraft.
• Howard Lefkowitz, Row 44‘s chief commercial officer says he thinks that
airlines, eager for new revenue, will sign onto a new ‗private labeled portal,‘
the details of which Row 44 will announce sometime in 2011.
• It‘s a ‗walled garden,‘ branded and designed by Row 44 for a particular
airline.
• It will offer live interactive concierge and retail services, including
destination-specific reservations for hotels, restaurants and shows says Mr.
Lefkowitz.

Source: New York Times, May 2011 http://www.nytimes.com/2011/05/24/business/24road.html

What Will the Future of
Onboard Retail Look Like?
• In surveying travellers globally, GuestLogix found that more than half would
take advantage of destination-related offers onboard a flight. The company
expect items such as tickets to entertainment, ground transportation,
attractions, tours and other offers that add immediate value to a trip to be in
demand, not just in Asia, but around the world.
• ‗In response, leading onboard duty-free concessionaires will evolve their
business models to include broader shopping categories with the
convenience of home delivery. This will represent the next wave in onboard
innovation that will usher in other important changes in the onboard
experience.‘
• ‗Airlines will need to upgrade their existing POS systems to meet more
stringent global payment standards. As connectivity slowly takes its place
onboard aircraft, payments will incorporate real-time credit card
authorisations to support higher-value transactions.‘

Source: Retail in Asia, April 2011 http://www.retailinasia.com/article/tech/retail-systems/2011/04/boardroom-inflight-retail-20-catching-asia-says-guestlogix

Future of In-flight Retail
• By Brett Proud, GuestLogix
• ‗The new in-flight retail environment will be distinguished not by the reselling
of once-included products and services, but rather by embracing and
extending the relationship between airline and passenger. It will be marked
by accurate assessments of consumer needs and wants and by the
fulfillment of these at any (and every) touch point of the journey. It will be
defined by customer experience and framed by retail-informed strategies of
merchandising and product mix.‘
• ‗Creating and promoting a successful customer relationship may be second
nature for ground-bound retailers but for airlines it means re-conceptualising
the passenger.‘
• ‗While the unbundled airfare relies on presenting fee-or-no-fee options to
passengers for basic, almost compulsory, products and services – a
checked bag, a seat assignment – the new approach to in-flight retail puts
the emphasis on the passenger.‘
Source: Travel Tourism Middle East, June 2011 http://www.ttnworldwide.com/GeneralNews.aspx?artid=10521

• ‗While the customisation of a flight experience during the booking process
certainly leverages the power of choice to deliver ancillary revenue, it does
not extend through the duration of the flight, much less after disembarkation‘.
• ‗The onboard store attempts to answer the questions: ‗Beyond the basics,
what does a customer on an airplane want? And what will they want or need
before and after their flight?‘ That answer is found in research and data
mining but ultimately it is found in a relationship with a passenger.‘
• ‗This is not to say that airlines have no relationships with their passengers;
on the contrary, much effort has been spent over the years in promoting
loyalty and extending the airline brand beyond the flight (with cobranded
credit cards etc). What the new in-flight retail approach does, however, is
apply different principles to the business of onboard retailing to extend that
relationship with the customer beyond the core product offered by the airline
(a ticket) – which is precisely why this approach is the future of the industry.‘


• ‗Within the onboard store, virtual shelves replace physical shelves with
great effect. Products are offered based on predetermined tastes and
preferences, flight duration and destination. A brand can be established and
extended through interaction with this onboard store – much as it has for
most of the retail success stories in the past decade. But in a controlled Wi
Fi-enabled environment or through the use of smart wireless point-of-sale
devices, passengers can explore the onboard store from the comfort of their
seat as well as interact with in-flight entertainment systems through their
own personal electronic devices.‘
• ‗Airlines also have information on their passengers‘ demographics, itinerary
and immediate purpose (i.e. business or leisure) readily
available. Traditional retailers would have to spend countless weeks
collecting data – and probably paying market analysts to interpret it – to get
the sort of valuable information airlines have at their fingertips. Utilising this
data to develop a compelling retail experience is central to the onboard
store approach and bound to become industry standard very soon.‘

Passenger Centric Retail
• Australia‘s Qantas Airways is set to deploy a touchscreen technology
solution for use in its onboard store.
• ―Speed and ease are fundamental in enabling us to deliver a new level of
customer service to our travellers,‖ said Mr. Eric Jelinek, Head of In-flight
Services at Qantas. ―We believe the implementation of an onboard retailing
technology and merchandising platform, through Alpha and GuestLogix, will
help us to enhance the in-flight experience for our customers.‖
• In addition to enhancing its current onboard duty free program, the
GuestLogix deployment provides Qantas with tools to create, manage and
control a more comprehensive branded onboard store.
• Qantas will be able to develop strategic offerings that evolve
standard onboard retailing initiatives into much more passenger-driven,
travel-relevant, destination based programs.

Source: Enterprise Innovation, October 2010
http://www.enterpriseinnovation.net/content/qantas-airways-use-touchscreen-onboard-store

Passenger Centric
• Virgin America‘s award-winning Red™ entertainment platform, has been
updated to allow travelers access to a host of new amenities, including next
generation, enhanced terrain view Google Maps, an open tab service for the
airline‘s one-of-a-kind on-demand menu and the first ever seatback in-flight
digital shopping platform.
• With the Red store, Virgin America and SkyMall have teamed up to give
flyers the chance to shop from their seatback at 35,000 feet from hundreds
of top brands like Sony, Canon, Sharp and Michael Kors.
• The debut of the Red Store marks the first time that SkyMall has developed
a product line designed specifically for purchase through an airline seat-
back entertainment system. In addition to a unique in-flight shopping
experience and a range of best-selling products, purchases made in the sky
via the Red store will allow guests to earn two points toward the airline‘s
Elevate Frequent Flyer Program for every one dollar spent.

Source: Virgin America, July 2010 http://www.virginamerica.com/press-release/2010/Virgin-America-Upgrades-Red.html

Passenger Centric
• The system also includes:
• Google Maps upgrades: Virgin America‘s previous Google Maps platform
led the industry with interactive maps with multiple levels of zoom. The
enhanced system will feature terrain view maps with fresher images and
eight levels of zoom functionality, so travelers can see the actual
topography over which they are flying.
• An "open tab": Guests can now swipe their credit card just once per flight
and order food, cocktails, movies and more – and keep a tab running during
the flight. With one swipe, travelers can peruse and purchase items,
including bar hopping (or ordering drinks for the plane), order from the food
menu and watch latest release Hollywood movies on demand.
• Premium food pairings: Virgin America is now providing suggestions on
pairings that come at a discounted price via their Red in-flight menu
system. Pairing examples include a Pacific brie and turkey sandwich,
paired with PopChips and Peach White Honest Tea available for $13.60.
Source: Virgin America, July 2010 http://www.virginamerica.com/press-release/2010/Virgin-America-Upgrades-Red.html

Building the Infrastructure
• Emirates‘ signature ―ICE‖ (information, communication, entertainment)
platform, powered by Panasonic Avionics‘ eX2 system, is a Strategy Award
Winner from 2010.
• In addition to offering near endless entertainment choices, ICE uses
Inmarsat L-band satellite-based connectivity and a standard ACARS
datalink to provide passengers with news and sports updates in-flight.
Passengers also have access to seatback dial-up e-mail and SMS
communications, as well as satcom telephony.

Source: Airline Strategy Awards, 2010 http://www.strategyawards.com/strategyawards2011/winners-2010

Building the Infrastructure
• Emirates vice-president Patrick Brannelly doesn‘t believe that connectivity
poses a threat to its IFE system. Instead, the carrier sees huge potential in
leveraging ICE to connect on a more personal level with passengers.
• ―We don‘t see [ICE] as embedded IFE. These systems aren‘t just [about]
entertainment. They‘re so much more. They are the portals through which
we communicate with our customer, and through which they communicate
with the world. As we go forward in the future, we‘ll be doing more and more
with those systems. Some of that really good stuff in the future is about
making that person‘s life easier.‖

Source: Airline Strategy Awards, 2010 http://www.strategyawards.com/strategyawards2011/winners-2010

Background Note
Rethinking the Experience
e.g. Korean Air
• Premium passengers on Korean Air's upcoming Airbus A380 superjumbo jets will be able to take
advantage of an onboard duty-free shop, reports FlightGlobal.
• The Korean carrier will begin operating its first A380 jet on June 10 of this year, with nine other
aircraft entering service soon afterward. Korean Air will reportedly become the first airline in the
world to feature a flying duty-free shop.
• "The shop replaces 13 seats on the aircraft so you're losing a lot of revenue, but the Korean
mentality is that they buy all the duty free on every flight," said Chris Wetter, the sales director for
AIM Aviation, the company that designed the new duty-free stores.
• Each onboard shop will be equipped with five display units, each of which can hold up to 66
pounds of merchandise. Overall, the store has room to display up to 64 different individual items.
• Once the jet is off the ground, full-time sales staff will take products out of storage and set up the
store. First class passengers are then given access to the shop's wares, after which the business
class travelers are allowed to peruse the merchandise.

Source: Access Fares, April 2011 http://www.accessfares.com/news/airline-cabins/korean-air-to-offer-onboard-duty-free-shop-to-premium-passengers-3753.html

Background Note
Tie-ins with Airport Retail
e.g. Booking / Boarding Pass
Offers
• Pullman Bangkok King Power hotel, the first Pullman hotel in the world, is offering more value for
travelers to enjoy upscale lifestyle and shopping experiences with the 'Shopping Spree Special'
promotion. Commencing today, travelers will enjoy a complementary 1,000 Baht King Power Duty
Free Shopping voucher for every night they stay at the hotel. The promotion was first valid from
June to September 30, 2010 with a minimum 1-day advance purchase (1).
• Valid from 15 February to 30 June 2011 is a variant whereby every 5000 Baht spent at duty free
gives 1000 Baht cash-back to use at the hotel (2).
• The hotel is attached to the city‘s only duty free shopping mall.

Source (1): PR Syndacast, June 2010 http://pr.syndacast.com/gb/press-releases/3767-pullman-bangkok-king-power-hotel-offers-duty-free-shopping-spree-special.html
Source (2): PR Web, February 2011 http://www.prweb.com/releases/2011/2/prweb8141693.htm

Air Sahara/Jetlite
• Jetlite, in its previous iteration as Air Sahara, started an onboard auction
named ‗bid n win.
• One form per passenger was handed out and a booklet displaying various
products divided into three categories.
• One passenger can bid for one product only.
• The bidding started from one - fifth of the market price of the product. The
auction involves writing your bid down on a from and handing it to the crew.
The highest two bidders won the prize.
• The product was then collected at the airport upon payment of the
submitted price. The practice has carried over to Jeltlite (2).
• JetLite is effectively facilitating a value added service for its guests.

Source: MouthShut, June 2005 http://www.mouthshut.com/review/Jet-Lite-formerly-known-as-Air-Sahara-tqoqttpqs
Source (2): JetLite, retrieved June 2011 http://www.jetlite.com/in/tnc_onboardauction.aspx

Attracting Brands
• Maxxium Travel Retail has announced a new inflight partnership with Virgin
Atlantic which will see Courvoisier served to the carrier‘s Upper Class
passengers both onboard and in the airline‘s Clubhouse at London
Heathrow Airport.
• Courvoisier will become the new pouring Cognac onboard and bottles of
Courvoisier VSOP will be available for purchase, with a pre-order service for
Courvoisier XO and L‘Essence de Courvoisier. Marketing support includes a
3D film about the heritage of Courvoisier on the inflight entertainment
system.
• At the Virgin Atlantic Clubhouse bar, passengers can enjoy Courvoisier XO
and Courvoisier Exclusif, served neat or in cocktails. Bartenders will
undertake training on the Courvoisier brand and specifically Courvoisier
Exclusif, the marque designed specifically for cocktails.

Source: Moodie Report, January 2011
http://www.moodiereport.com/document.php?c_id=31&doc_id=26155

Attracting Brands
• A dessert paired with Courvoisier has been specially created for passengers
dining in the Clubhouse, which will also feature a competition to win a bottle
of L‘Essence de Courvoisier.
• Virgin Atlantic Director of Sales and Marketing Paul Dickinson said: ‗We are
delighted to be working with Courvoisier. We are always looking for ways in
which to enhance the passenger experience and are sure that the addition
of this premium brand will be popular in our Clubhouse and onboard.‘
• Maxxium Travel Retail Managing Director Glen Williams added: ‗Together
with Beam Global, we are delighted to offer its customers a unique travelling
experience with Courvoisier from the Clubhouse right through to the flight.
Travel retail is a key market for Courvoisier and our aim is to become the
number one Cognac by 2013. This alliance will play an important role in
achieving that goal.‘

Source: Moodie Report, January 2011
http://www.moodiereport.com/document.php?c_id=31&doc_id=26155

In-flight Partnership
• Emirates has partnered with Montblanc to offer customers the opportunity to
win a luxury trip to Hamburg and an exclusive Montblanc Skeleton A380
limited edition writing instrument worth US$19,640.
• Customers on board all Emirates flights who purchase the Montblanc
StarWalker A380 fineliner from Emirates‘ Duty Free, can register for a raffle
draw to win a trip to Hamburg, Germany, where they will receive the
Montblanc Skeleton A380 Limited Edition.
• "Once again, we are delighted to team up with Emirates for another
prestigious onboard campaign,‖ said Karl-Heinz Handke, President Western
Hemisphere, Montblanc. ―With its premium services and exclusive customer
base, Emirates is the ideal partner for Montblanc to showcase a precious
and unique writing instrument.‖

Source: Travel Trade New Zealand, January 2011
http://www.traveltrade.co.nz/LatestNews/NewsArchive/tabid/342/articleType/ArticleView/articleId/1284/Default.aspx

Brand Marketing Partnerships
• Diageo Global Travel & Middle East Managing Director Phil Humphreys
believes that the inflight channel can be a key driver of his vision to double
travel retail liquor sales in the next five years.
• The DFASS-produced Singapore Airlines inflight shopping guide for
September–November features a stunning five-page section on Diageo‘s
Johnnie Walker portfolio, complete with an exclusively produced two page
insert, culminating in an opportunity to win two flights to Singapore for the
F1 race, plus event tickets and a lavish accommodation package. ―We paid
for the flights, Diageo paid for the passes,‖ FASS Singapore President John
Garner says of the collaborative approach.
• Singapore Airlines‘ set-up ensures that carts can be tailored to individual
routes – Korean and Indian flights, for example – opening up all sorts of
possibilities for the star-studded Diageo portfolio. ―I can work with John to
specifically target certain profiles,‖ explains, Mr Humphries, noting that such
an approach had led to a six-fold growth in inflight sales of Ketel One vodka.
Source: Digital PC, retrieved June 2011
http://mag.digitalpc.co.uk/Olive/ODE/themoodiereport/LandingPage/LandingPage.aspx?href=VE1Sb2RlLzIwMDkvMTAvMDE.&pageno=MjUy&entity=QXIyNTIwMA..&view=ZW50aXR5

Brand Marketing Partnerships
• So can a ‗strategic partnership‘ really make such a difference in volume
terms? ―Totally,‖ Humphreys replies. ―Already since we commenced our
strategic partnership we have seen volumes grow significantly, and value
enhanced. This gives me even more confidence that this business is built
on stone, and early investments will reap their rewards going forward.
• ―We have some amazing ideas to drive purchase, working side by side with
John Garner and his team,‖ he says. ―I am very excited about this channel –
to me it‘s the hidden jewel of travel retail.‖

Source: Digital PC, retrieved June 2011
http://mag.digitalpc.co.uk/Olive/ODE/themoodiereport/LandingPage/LandingPage.aspx?href=VE1Sb2RlLzIwMDkvMTAvMDE.&pageno=MjUy&entity=QXIyNTIwMA..&view=ZW50aXR5

Transport Synergies
• GuestLogix, Inc. has been awarded the 2011 ―Innovation of the Year:
Implementation‖ at the 2011 Global AirRail Awards.
• GuestLogix received the award for OnTouch® Ground Connections; a
technology and merchandising platform that allows airlines‘ passengers to
purchase Heathrow Express tickets through their network in a secure and
highly accessible manner.
• As the airline industry continues to battle against price commoditization,
operators have looked to find new ways to generate revenues while creating
a true value-add to their passengers
• GuestLogix generates revenues for both parties andgives increased service
to travelers, providing the sale of Heathrow Express tickets to airlines‘
passengers prior to arrival at the gate.
• GuestLogix‘ platform also provides access to additional sales channels.

Source: GuestLogix, May 25th 2011 http://www.guestlogix.com/pr/pr_05-25-11.html

Outsourcing In-flight Duty Free
• The world's second biggest inflight duty free programme at British Airways is
to be outsourced to Tourvest Duty Free in the second half of 2011, following
an internal review of the business, according to a circulated communiqué to
suppliers from BA Retail Manager Nigel Smith.
• According to Generation Research, BA's inflight business was worth an
estimated $128.4m in 2009 (-13.5% on 2008 in US dollar terms: +2.5% in
£), placing it second among the world's airlines behind Korean Air at $170m,
but ahead of Thomson Airways (UK) at $112m and Thomas Cook Airlines
Scandinavia at $103.6m.
• BA's programme is acknowledged as one of the best in the world and
Tourvest is also a good inflight retailer which currently operates Virgin
Atlantic's inflight concession out of its bonded warehouse at Gatwick.
Tourvest also operates the inflight concessions with South African Airways,
Kenya Airways, Interair and South African Express.
• Tourvest Duty Free has won various awards in the past, including the
Frontier Award for Inflight/Marine Retailer of the year in 2009.
Source: Trend, January 2011 http://www.trend-news.com/default.asp?newsid=9337

The Sky Isn’t the Limit…
• King Power Traveler President Rakhita Jayawardena issued a rousing call
to action for the inflight retail industry in his closing keynote address at the
2011 ARC Asia-Pacific in Macau.
• ―Can we not sell a Patek Philippe watch? Can we not sell a pair of Jimmy
Choo shoes? Imagine a Patek Philippe watch at US$10,000. With a 20%
saving on tax from the domestic price, topped off with a discount of 5% for
being a Platinum Gold Card member would mean a whopping 25% or
US$2,500 off the high street price. Would not a passenger like to make
himself available for this opportunity to buy and save? Similarly, why can‘t
we sell a pair of Jimmy Choos offering great savings? This type of
transaction would contribute enormously to the overall growth in sales per
passenger.‖

Source: The Moodie Report, 2011 http://www.moodiereport.com/document.php?c_id=40&doc_id=26281

A Useful Start
• Results in the 12th annual SITA/Airline Business IT Trends Survey (2010)
show that the airlines which carry the bulk of the world's air traffic, are on
course to sell the majority of airline tickets direct to passengers by 2013.
• The record 129 airlines who responded to this year's survey carry over one
billion passengers and are currently selling 40.8% of tickets directly to the
public which breaks down as: over the internet, 25.8%; through call centres,
10.7%; and interlining, 4.3%.
• These 129 airlines intend to bring their level of direct sales up to 55.1% by
2013. While sales through airline call centres and interlining will remain
largely static, direct channel sales through websites are expected to jump to
37.9%.
• In order to increase online sales, airlines are prioritizing the implementation
of new functionality on their web sites in the following ways: online shopping
tools (61% have already implemented this); change/cancel/rebook (52%);
and frequent flyer redemption functionality (51%).
Source: SITA, June 2010 http://www.sita.aero/content/new-survey-finds-airlines-turning-retail-powerhouses

A Useful Start
• This is in line with overall airline strategy to migrate passengers to self-
service including a multi-channel check-in environment. The airlines stated
ambition is to reduce the number of passengers processed via agent check-
in from 50.7% to 28.9% by 2013. Passengers use of kiosk check-in is
expected to remain static at just below 20% while web check-in options will
grow from 21.6% today to 35.5% in 2013. Airline implementation of mobile
check-in will advance from 28% today to 80% by 2013.
• Although the proportion of passengers using check-in kiosks remains static,
the survey confirms the important role of kiosks in a multi-channel
environment. 47% of airlines plan to increase the number of kiosks they
deploy as they gradually move towards the next step of adoption by adding
new functionality for flight transfers and disruption management.
• The survey also found that 80% of the largest airlines plan to use kiosks as
sales points.


A Useful Start
• The next wave of implementation will be around booking portals for travel
agencies which 41% have already done and a further 43% plan to do by
2013; while 44% have already implemented booking portals for corporate
customers and a further 38% plan to do so by 2013. By comparison, just
21% of survey respondents have integrated social networking capabilities
while 45% have no plans to do so.
• In addition, 70% of airlines have a strategy in place to use the passenger's
mobile phone as a further distribution channel to sell air tickets. Currently,
18% of airlines sell tickets over mobile phones and the ambition is to reach
70% by 2013. Some 85% of the largest airlines responding to the survey
plan to offer such services by 2013.


A Useful Start
• The mobile phone will become an essential tool for airline travel by 2013
with 86% of airlines planning to offer flight notifications; 80%, online check-
in; 76%, send electronic boarding passes to mobiles; and 68% using the
mobile phone to target passengers with travel offers.
• Airlines are becoming increasingly adept at upselling, using fare families
and marketing types; unbundling fares, by charging for services such as
meals and baggage management; and selling non-air services such as
hotels, car hire and insurance. Most of this revenue generation takes place
direct on line: 63%, upsell; 41% unbundle; and 51% sell non-air services. In
2013, 91% of survey respondents will have implemented at least one of
these ancillary revenue strategies via their own direct web channels.


What Lies Ahead…
• Passengers in the future can expect much-maligned airline fees to be
replaced by a wide variety of in-flight retail choices and in what is perhaps a
surprise, travelers will have more choices to book low-cost airlines.
• Those were among predictions of three air travel experts asked by
TravelMole to peer
• ―We expect to see much more revenue-generating activity through in-flight
retail (enabled by in-cabin Wi-Fi and controlled web portals),‖ said Brett
Proud of GuestLogix. He envisions en evolution away from fees towards
more innovative airline marketing such as catalogue sales. Airlines are
moving towards ―virtual onboard stores‖ with products and services that
might include an Orlando family able to buy theme park tickets on a plane or
business travelers enroute to London‘s Heathrow able to buy a rail ticket
while in the air.

Source: Travel Mole, December 2010 http://www.travelmole.com/stories/1145574.php

What Lies Ahead…
• The future of the airline industry is not more fees because travelers will not
spend hundreds of dollars for new ones but instead passengers can expect
new retail moves, says Raphael Bejar of Airsavings.―Airlines are looking for
value-add services that will not only increase their profits but which improve
the customer in-flight experience,‖ he said. He predicts airlines acting as
retailers is an evolving trend that will ―become a normal part of the customer
in-flight experience.‖
• As for the prediction that the end is near for low-cost airlines, Roger
Williams of Airline Information says that is not the case.―In fact, I would say
this is only the beginning of low cost airlines,‖ he said. He makes the point
that a distinction has to be made between a low cost airline that keeps
operating costs low and budget airlines that offer low fares ―thanks to a low
cost structure.‖That‘s the case in part because traditional old-time airlines
with higher cost levels ―have learnt valuable accounting lessons from low-
cost airlines.‖


What Lies Ahead…
• Passengers might expect airlines to continue to find new avenues for fees,
but their ―future lies in redefining (and in some cases, reimagining) the
customer's experience, with an emphasis on promoting sales and value, not
extracting fees,‖ said Proud.
• The expected move towards selling various products should be successful
for the airlines because they already have such metrics as destination and
demographic information that ―traditional retailers would kill for,‖ Proud said.
―As with any product and service offerings, customers‘ adoption is
important, but with the detailed information and captive audience an airline
already has, high adoption and purchase rates are very likely, "he said.
• A good news item for passengers in the future is that they will increasingly
have choices of products they wish to buy or can reject and not have to pay
more. If a passenger is not hungry, he or she skip food offerings, for
example.


Travel Sales Trends

Source: Generation Research, Sweden

Source: Airline Retail Conference 2010 http://www.airlineretail.com/cms/wp-content/uploads/2010/07/ARC2010-Day-2-1-Doug-Benham.pdf

Fast Future –
Travel and Meetings Industry Services

• Briefings and workshops for executive
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• Consultancy and workshop facilitation on
innovation and new business models

80

Fast Future
• Research, consulting, speaking, leadership
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people, trends and forces shaping the future
• Clients
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– Corporates - GE, Nokia, Pepsi, IBM, Intel,
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• Meet four time a year
• Initiated and co-ordinated by Fast Future

Rohit Talwar
• Global futurist and founder of Fast Future Research.
• Award winning speaker on future insights and strategic
innovation – addressing leadership audiences in 40 countries on
5 continents
• Author of Designing Your Future – Published 08/2008
• Profiled by UK‘s Independent Newspaper as one of the Top 10
Global Future Thinkers
• Led futures research, scenario planning and strategic
consultancy projects for clients in telecommunications,
technology, pharmaceuticals, banking, travel and tourism,
environment, food and government sectors
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Beers, DHL, EADS, Electrolux, E&Y, GE, Hoover, Hyundai, IBM,
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Siemens, Symbian, Yell , numerous international associations
and governments agencies in the US, UK, Finland, Dubai,
Nigeria, Saudi Arabia and Singapore.
• To receive Fast Future‘s newsletters please email

Designing Your Future
Key Trends, Challenges and Choices Facing
Association and Nonprofit Leaders
• 50 key trends
• 100 emerging trends
• 10 major patterns of change
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leaders
• Strategic decision making
framework
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• Published August 2008
• Price £49.95 / €54.95/ $69.95
• Email invoice request to

Our Services
Bespoke research; Identification &
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Shocks
Public Speaking, In-
Company Briefings, Accelerated Scenario
Seminars and Planning, Timelining &
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Leaders and Leadership Expert Consultations &
Teams Futures Think Tanks

Identification of
Design & Facilitation of Opportunities for
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& Venturing
Programmes Strategy Creation & Investment
Development of
Implementation
Roadmaps

Example Projects
• Public and private client research e.g. :
– Convention 2020 – the Future of Business Events
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– The Future of Travel and Tourism in the Middle East – a Vision to 2020
– Future of Travel and Tourism Investment in Saudi Arabia
– Aviation and Airports e.g. Aviation 2030
– Scenario Projects – Migration 2030, Future of Narcotics, Chemical Sector, Family 2030
– Scenarios for the global economy for 2030 and the implications for migration
– Designing Your Future (Published August 2008) – book written for the American Society
of Association Executives & The Center for Association Leadership
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Image Sources p 1
Page
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demand-3d-printing-cut-waste-increase-efficiency.php
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uRw36rGI/AAAAAAAABjU/R1fbbAOnWVM/s1600/photo4.JPG
22. http://www.fastcodesign.com/1662241/wheeeeeee-slides-made-for-adults-in-dire-need-of-fun-video
23. http://www.moodiereport.com/document.php?c_id=40&doc_id=26281
24. http://i.zdnet.com/blogs/jetblue.jpg
25. http://www.maximumpc.com/files/u45851/online_retail.jpg
26. http://www.kynsale.com/Images/KeyImages/Psychographics.png
28. http://apcmag.com/images/a330-200-bizmon.jpg
29. Left to right - http://www.jaunted.com/files/6193/RedStoreshot.jpg ,
http://cms.ukintpress.com/UserFiles/AII%20News/26.07.10/Red_RedStorescreenshot_rz.jpg

Image Sources p 2
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32. http://www.thaipr.net/nc/readnews.aspx?newsid=288c78b58d8eab4f8027cdec8130406f
33. http://www.ausbt.com.au/photos/view/maxsize:467,260/4d9b0ccb2ed843899e7d650b767f1341-koreanair-dutyfree.jpg
34. http://files.coloribus.com/files/adsarchive/part_826/8264155/file/axn-channel-boarding-pass-small-24894.jpg
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43. http://www.moodiereport.com/images2/dfass_krisshop_jun-aug2010_johnnie_walker_big.jpg
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