Why Airlines Should Prioritize Ancillary Revenue in 2024
The COVID-19 pandemic has had a lasting impact on the airline industry, particularly affecting business travel. With a slower-than-expected return of corporate travelers and the rise of virtual meetings, airlines face the challenge of compensating for this revenue loss. A viable solution lies in innovating within the leisure segment by enhancing ancillary services.
Traditionally, airlines have offered services like car rentals, accommodations, and travel insurance on their websites. However, the potential for ancillary revenue extends far beyond these offerings. By adopting a more dynamic and personalized approach, airlines can significantly boost their income from ancillary services.
1. Leveraging Technology Platforms for Ancillary Services
Integrating a diverse range of ancillary services into existing airline systems can be complex and costly. Fortunately, modern platforms like ours can operate independently of legacy systems while delivering personalized offers to travelers. For example, Anxilla's platform requires minimal overhead to provide customized ancillary options without extensive backend integration. This approach enables airlines to swiftly and flexibly enhance their ancillary offerings.
2. Timing Ancillary Offers to Traveler Needs
Airlines often present ancillary services at the time of booking, offering options like rental cars, extra luggage, or hotel stays. While relevant, these offers may not align with the immediate priorities of travelers. To maximize effectiveness, ancillary services should be offered at strategic points throughout the customer journey. For instance, a traveler on a weekend getaway might appreciate transportation options closer to departure, while a family on a two-week vacation could be interested in destination-specific activities. Tailoring ancillary offers to the timing and context of the traveler's journey enhances relevance and uptake.
3. Expanding the Partner Ecosystem with a Focus on Key Destinations
Ancillary services can be marketed at every stage of the travel experience—before, during, and after the trip. Currently, many airlines concentrate on standard offerings between booking and departure. However, significant opportunities exist in providing services at the destination, such as restaurant vouchers or exclusive event tickets. Focusing on popular destinations and partnering with service providers that align with the airline's brand can create compelling ancillary offerings. Importantly, airlines hold a strategic advantage as the initial touchpoint in trip planning, positioning them to effectively market these services.
In conclusion, by adopting innovative platforms, strategically timing ancillary offers, and expanding partnerships, airlines can enhance their ancillary revenue streams. This approach not only compensates for lost business travel income but also enriches the overall traveler experience.
