Ancillary revenue: A boon or a bane for the airline brand?

The ancillary revenue is both boon and bane depending on the type of carrier applying it.

So, it is bane for legacy carriers which are already charging high rates for their services. Those air carriers are presumably providing the basic air service plus a reasonable amount of amenities depending on their service philosophies and their market competition. They are not supposed to collect additional charges (ancillary revenues) or otherwise they will negatively affect their brands. For Singapore Airlines to collect additional charge for the emergency-exit row seat is an example of a practice which is on conflict with the brand.

On the other hand, the ancillary revenue is a boon for low-cost carriers. They are presenting themselves as providers of the basic flying services. For increasing their operating revenues, they have to consider ancillary revenues. Of course, collecting the ancillary revenues does not jeopardize their brands as long as they are staying away from asking the passengers to pay for using the toilet.

Putting the nomenclature aside, the reality is that both legacy carriers and low-cost carriers are out there to make money. They are adopting various pricing policies in such a way to make them profitable. Legacy carriers are depending on traditional bundled air fares while budget carriers are depending on a group of unbundled fare components.

Published at http://simpliflying.com

Reality check: Why social media can be the solution for airlines’ grey skies

The effective functionality of Web 2.0 is yet to be thoroughly verified.
What is for sure so far is that Web 2.0 is no longer just for teenagers.

Published at http://simpliflying.com

King of ancillary revenues, RyanAir offers €1,000 for best idea on making money!

Asking for more fresh ideas is unquestionably a good PR idea for RyanAir. Giving away 1,000 euros is almost nothing compared with the high publicity RyanAir will receive from propagating the news about its contest.

Legacy carriers can apply the same idea with little modification. They can simply organize similar contests but not for asking for fresh ideas to generate more ancillary revenues (like the case of RyanAir), but rather asking for fresh ideas to improve the overall passenger services. Thus, the passengers will be double-motivated to seriously participate in any of those contests. Apparently, they have a chance to win the contest and enjoy the to-be enhanced service of the legacy carrier.

Alas for those who can not participate in the contest of RyanAir due to their place of residence! The good news for me is that I will have less competition. However, to show my philanthropic traits, I am ready to have a joint venture with anyone of those ineligible contestants who has a knock-out idea for RyanAir.


Published at: http://simpliflying.com

How an intelligent seating system can bring ancillary revenues, and is great for the airline brand

Definitely, I am not interested to be seated beside a mother traveling with her infant irrespective of the purpose of my trip (business or leisure).

Matching the passengers together is a good idea. Beyond the obvious criteria of grouping similar passengers together, is there a chance to seat single females beside non-married family-oriented males? The result might be happy passengers for both their flying experience as well as their success for building a family. Who knows? The marriage might also create another congenital loyal generation.

Generally, there is a potential for a system like Satisfly. Incorporating Satisfly could be one step more for those airlines which are keen about improving the flying experience of their passengers onboard. Thus, considering Satisfly is a long term investment and makes a lot of sense to be considered now as a way of keeping the existing customers. Of course, those airlines will not be using the system to generate ancillary revenue.

The issue may be different for low-cost carriers. Their passengers are paying for necessary services only: luggage, food, drinks, and eventually for using the toilet. They do not care that much about their flying neighbors who are sitting around them. Consequently, I can say that Satisfly has limited potential in LCC model especially during the current economic conditions.

Date: 15 March 2009 commenting on http://simpliflying.com
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AirAsia X: a brand with a huge potential, but remember, “you’re only buying the flying”

It is too early to predict the success or the failure of the low-cost long-haul model. The historical experience, represented by Oasis Hong Kong Airlines and Canadian Zoom Airlines, is not encouraging at all. Even, the 20% stake of AirAsiaX, which held by Richard Branson’s Virgin Group, adds more reservations to the whole idea. Moreover, it is widely known that LCC model does not work for flights over about 13 hours. However, the current economic situation might act to the advantage of AirAsiaX. Something else to be considered is the fact that Malaysian Airlines operates 2 daily Boeing 747 flights between Kuala Lumpur and London. That simply means that MH is making more than 700 daily seats available. It will NOT be a problem for AirAsiaX to acquire some of the existing MH customers who might be enticed by the price advantage of AirAsiaX.
I heard Tony Fernandes, the CEO of AirAsia talking about an important fact which might make things easy for AirAsiaX. He said that their cost is 0.03 US$ per ASK.
The support of feeder traffic provided by AirAsia as well as the existing traffic conditions between Kuala Lumpur and London are unique to AirAsiaX. Thus, the hoped-for success of AirAsiaX is not automatically applicable to any similar long-haul model.
 
Date: 12 March 2009 commenting on http://simpliflying.com