Travel merchandising overview
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I am speaking at a Revenue Mgmt and Travel Merchandising conference in London. Travel merchandising is certainly a huge opportunity for airlines and other travel suppliers. I will discuss learnings from Frontier Airlines and others. Pricing and revenue management play a critical role.
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Travel merchandising overview
- 1. The New World of Travel Merchandising Tom Bacon Consulting December, 2011 ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 1
- 2. Airline Commodization Travel Distributors: Price Focus Successful Third Airlines Match Party Distribution Fares; Cut Costs Commodization: Svcs Cut; No Differentiation ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 2
- 3. Airline Commoditization ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 3
- 4. Airline Differentiation New Value Added Services Airlines Match Successful Direct Lowest Fares; but Distribution Offer Customization New Customer Engagement ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 4
- 5. Airline Differentiation New ancillary fees: • Allow fare match with LCC’s Ancillary • Introduce new revenue streams $ Service Fees o Increase total revenue • Provide customers with new choices All o New customer engagement Inclusive o Reduce costly behaviors LCC Fare • Tend to drive traffic to website Match o Not fully supported by third parties Full-Service New Ancillary o Lower cost distrib channel Fares Svcs …AND… ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 5
- 6. Travel Merchandising Travel INTRODUCING Merchandising A WHOLE NEW WORLD E-commerce; CRM; Ancillary OF AIRLINE Service MARKETING Science of Choice Fees All Market Trvllr Inclusive Generic Segmentation ID’s LCC Fare Match Freq Branded Personal- Sell-up Flyer Full-Service New Ancillary Fares ization Perks Fares Svcs ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 6
- 7. Travel Merchandising • Most travel suppliers have not recognized the shift in customer Travel needs Merchandising • Allegiant Airlines, however, positions itself as a travel merchandiser – not E-commerce; CRM; simply an airline Science of Choice Market Trvllr Generic Advertising, referrals, non-air Segmentation ID’s promotions include hotels, car rental, and events Freq Branded Personal- 30% of revenue is not fare- Sell-up Flyer related (2X airline average) Fares ization Perks ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 7
- 8. Travel Merchandising ARE YOU FULLY Travel EXPLOITING THIS NEW Merchandising WORLD? E-commerce; CRM; Ancillary Science of Choice Service Fees Market Trvllr All Generic Inclusive Segmentation ID’s LCC Fare Match Freq Branded Personal- Sell-up Flyer Fares ization Full-Service New Ancillary Perks Fares Svcs ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 8
- 9. Tom Bacon Consulting Revenue Optimization 30 Yr Track …across the Record of Travel Industry Success Pricing Pricing & Rev $20 B Global * Revenue Mgmt Mgmt Airline * Ancillary Service Fees Schedules/ >$1 B Low Cost * Revenue Forecasts Route mgmt Carrier REVENUE Mkg, Sales, & >$1 B Distribution Independent OPTIMIZATION Regional Airline Planning Product * Network Mgmt FP&A Travel * Profit Mgmt * New Markets Distributor (IT) * IT Systems * Distribution / * Corp.Developmt e-commerce ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 9