Big Spenders: Air Travellers Would Pay Up to $100 for These Extras

Sabre has released a new study showing that passengers are willing to pay $100 for a more personalised and enjoyable air travel experience.

The survey, conducted by GFK on behalf of Sabre between September and October 2016, included travellers 18 years and older from 6 world regions and 20 countries who have travelled over the past six months. Participants were asked a series of questions about personalisation and travel, which revealed the ancillary products and services they value most.

The results show that 80 percent of travellers purchased extras for their last trip, with an average spend of $62. Asked whether they would spend more for personalisation, responders said they would spend up to $99 if it improved their travel experience.

 

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_4

However, who would spend what when and where varies. So does the individual definition of personalisation.

Here, There, Not Everywhere

As illustrated in the Sabre graphic below, passengers around the world personalisation is defined by a combination factors: choice, recognition, relevance, customer memory, context.

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_5

Passengers view ancillaries as a natural part of travel personalisation. The vast majority (94%) want companies to give them a choice of products of services which best suit their needs. 80% of travellers said they will spend on extras to get the travel experience they want.

Passengers are already spending a good deal on ancillaries, but are generally willing to spend more ($98 on average) to get the products and services they value most. Globally, the most valued ancillary is a cabin class upgrade (11.1%), followed very closely by onboard food and beverage and extra legroom (both at 11%).

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_8

Passenger priorities for products and services vary by region, so airlines should weigh their ancillary offers accordingly.

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_3
The amount of spend also varies by region. The biggest spenders, located in Africa, are now spending $95 and willing to spend $144 for extras. Asia Pacific passengers currently spend the second highest amount ($63) but max-out at the lowest level of  ‘extra’ spend ($76).

North America presents interesting opportunities. Passengers currently spend the lowest amount in ancillaries ($44) but are willing to double that amount ($88) to get what they want.

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_7

“It’s clear that while there are regional differences in ancillary preferences, 80 percent of all travellers spend on air extras, representing a significant revenue opportunity for airlines,” said Dino Gelmetti, vice president EMEA, Airline Solutions, Sabre. “Airlines know what their travellers want based on the data they have of past purchases. Yet so much of this data remains unused today. However, by leveraging the latest technology, airlines can unlock this data and show they know their travellers by offering the right products at the right time and tailoring a personalised experience that will improve customer loyalty and generate much needed revenue.”

Don’t Automatically Automate

While automation might make personalisation easier—with data gathered on passenger preferences prompting offers in context of the journey—personal customer service is still very important in certain regions. So are travel agents.

“Both airlines and travel agencies have a role to play in providing travellers with a complete booking service that combines the convenience of technology with the power of human interaction,” said Shelly Terry, vice president, product marketing, Travel Network, Sabre. “Airlines can maximise revenue by leveraging the expertise of travel agencies and ensuring their inventories are conveniently available to passengers through both direct and indirect channels, giving people the choice and freedom to book travel the way it suits them.”

sabre_personalisation-and-the-regional-traveller_pdf__page_9_of_9__1
Respect Privacy

Passengers want their privacy protected when sharing data with travel services providers which might help make travel smoother. But it’s a very close divide between those who are willing to share data (49%) and those who aren’t (51%).

https___www_sabre_com_files_sabre_personalisation-and-the-regional-traveller_pdf_6

Globally, Asian travellers are most willing (64%) to share personal information and North American passengers are least willing (46%).

Bringing Personalisation On-Board

Sabre has recently shared how two airlines are taking advantage of the personalisation capabilities of its systems in new ways.

Air Canada has applied the ‘Sabre Red’ platform to sell new Preferred seats, as part of an expansion of its Sabre marketplace merchandising strategy.

“Air Canada has a bold vision in creating a personalised journey for their passengers, and Sabre’s technology supports every strategic aspect in delivering their differentiated merchandising strategy,” said Sean Menke, President of Sabre Travel Network. “Our collaboration aims to put their customers first, enabling agents with transparent shopping and pricing of their brand, and ultimately a streamlined booking experience.”

“Air Canada remains focused on delivering products and services, such as Air Canada Preferred Seats, that bring value to our customers and enhance their travel experience with us,” said Duncan Bureau, Vice President Global Sales of Air Canada. “By making this available through the Sabre agency platform we are continuing our commitment to our loyal agency network to make selling Air Canada as seamless and efficient as possible.”

Aegean Airlines recently became the seventh airline to implement Sabre ‘AirVision Revenue Optimizer’ to better personalise fares offers, in keeping with traveller profiles.

“Utilising revenue management systems of the past can no longer produce long-term profitability,” said Pramod Jain, vice president of Sabre AirVision. “Legacy systems lack the ability to have real-time, accurate, customer-focused capabilities. Airlines need a next-generation revenue management platform like ‘Revenue Optimizer’ that provides the opportunity to consider the total customer value and therefore become better retailers.”

‘Revenue Optimizer’ makes recommendations which let airlines offer the right product to the right customer at the right price. It gives airlines end-to-end control, helps them better understand traveler profiles, responding to traveler needs and willingness to pay in real-time, while efficiently pricing and selling seat inventory and ancillary products.

This is done by leveraging live data from the passenger service systems (PSS) and other Sabre commercial planning solutions, such as scheduling and pricing.

Sabre says that airlines using the system have seen incremental revenue growth of up to two percent.

“Sabre’s real-time data processing, enhanced integration and advanced decision support tool capabilities were impactful considerations for Aegean,” said Roland Jaggi, Director Revenue Management, Pricing, International Sales at Aegean Airlines. “By leveraging ‘Revenue Optimizer’, we will be able to maximise revenue opportunities by offering our customers innovative and personalised services and retail offers.”

3 thoughts on “Big Spenders: Air Travellers Would Pay Up to $100 for These Extras

  1. Interesting to note how Duty Free shopping is conspicuous by its absence from “items to buy” in this report. Especially as there is such a high demand for luxuries in Latam and APAC. This seems to indicate how the airline/travel tech sectors still can’t quite understand the Duty Free market, even though it is worth in excess of USD$60billion.

    1. This is a very good point. In fact, results from Ideaworks and CarTrawler show that you are right—duty free is an important contributor to passenger spending onboard. It could also benefit from better merchandising and retail strategies. In this case, however, I believe Sabre focused on ancillary categories which could be sold through its software platform.

  2. The core issue is that Duty Free retail doesn’t know how to link to Travel Tech and travel tech doesn’t know how to link to Duty Free. So, whilst there is this impasse, a $60billion market goes elsewhere… food for thought!

Leave a Reply