Stretching the supermarket e-commerce analogy to an airline environment

EFT Ancillary Revenue in Travel 2008 Special, Dublin

With websites garnering millions of unique visits per month and sizable opt-in e-mail subscriber lists, low-cost airlines have vast customer bases they are able to sell directly to. To what extent are they ready to expand their product basket to extract maximum revenues from their customers?

Sharing his perspective during EyeforTravel's inaugural Ancillary Revenue in Travel 2008 conference being held in Dublin, easyJet's partnership manager Leo Purcell referred to few facts including its English language site alone receiving more than 14 million unique visits in January, having pan-European email database of more than 6 million opted in subscribers and brand awareness being at 99% in core countries and 60% across all markets.

"The time has come (for airlines) to decide what sort of products and partnerships to focus on as we stretch our brand," said Purcell, indicating possibility of suppliers becoming genuine e-commerce players in the years to come. He stressed on his point by talking about supermarket chain Asda.

"Asda has announced plans to expand its Internet service with the aim of generating £1 billion from online sales by 2011. The WalMart-owned retailer will reportedly launch its first Asda Direct catalogue in October this year, offering over 10,000 products. Over 750,000 non-food items will also be available on Asda's web site from the summer," he said.

During the same session, Ryanair's Head of Ancillary Revenue Santina Doherty said the airline has new plans to extract more in terms of ancillary revenues in the next 12-18 months. She indicated about dynamic packaging coming in 2008, insurance – push for upgrades and dynamic pricing, credit cards – roll out throughout Europe, electronic sales in-flight and wide range of services for in-flight phones. 

Recently when Ryanair shared its third quarter results, it stated that ancillary revenues (excluding a one off €10m termination payment in the prior year) grew by 30% to €111m.

"Ancillary penetration continues to increase, and we are on target to achieve our ancillary sales objective of 20% of revenues over the next three years. In-flight mobile phone services will be tested on 25 aircraft – subject to regulatory approval - during the April-June quarter and we are optimistic that passengers will quickly adopt this service to make/receive calls and texts on their mobile phones and blackberries," Ryanair's CEO, Michael O'Leary had said.

Ritesh Gupta

EFT Team