Mark Lenahan, Vice President for product strategy at OpenJaw Technologies, joined us at this years Aviation Festival Europe. The OpenJaw t-retail Platform, is said to be the success for many airlines who are hoping to increase their revenue by selling more online.
Mark Lenahan, was therefore in a great position to lead the ‘Making The Business Case For Retail Travelling’ round-table. Below are three key points, he believes you should take away from the discussion:
1. It is the “mind set” that makes a retailer, this comes before structure, technology or processes. The retailer mind set is not to focus on one product line but rather to serve as many of the customer’s needs as possible – whether with you own or third party products. One example of this mind set is who the retailer sees as a competitor. A competitor is anyone who is competing for customer acquisition, attention or spending. For airlines as retailers this can mean that an OTA is as much a competitor as another airline.
2. Personalisation is seen as a key retailing attribute. Knowing more about your customers allows you to better meet their needs and make better choices in promotion and merchandising of products. One to one marketing means that each customer gets a unique view based on both current and past behaviour. It is important to address privacy concerns through transparency and control and security. If the customers trust you they will share personal data in return for convenience and more relevant offers.
3. The potential business outcomes of travel retailing for an airline will vary enormously depending on market, origin destination, purpose of travel, and type of product. A single airline can see attach rates varying form 30% to 1% on different routes even with the same supplier partner. In some markets car rental out performs hotel, and vice versa. Getting closer to supply, for example – contracting hotels directly, allows the airline to offer best rate or differentiated products. Having identical prices and content to large OTAs is not competitive, airlines can offer unique value with in-line cross sell and packaging especially when they have a mix of direct and aggregated supply. Some carriers would rather be agents for the initial sale but not merchants. On one hand this reduces the cost of customer service (customer must deal directly with hotel, car, insurance company for all changes), but on the other hand it means the airline loses the customer relationship. The best long term strategy is to retain the customer relationship and service all the customers needs, recognising the revenue for all sales and services. Airlines like S7 and British Airways are actually own and operate bonded tour operator subsidiaries in order to sell flight and hotel packages, both are the customer’s primary contact point for cancellation and modification, or customer service issues.