Ask the expert: Julia Sattel

Julia Sattel says airlines need to promote new services.

Question: How can airlines boost revenue through ancillary services solutions?

Expert: Amadeus vice president of airline IT Julia Sattel

We are now seeing more and more airlines embrace the ancillary services trend that has started to contribute significantly to airline revenues. A number of services that were previously bundled into the fare are now subject to payment by the customer, the most common ones being baggage fees and meals on board. But the list doesn't stop here.

There are also a number of new ‘a la carte' services that will both please the customer and generate further incremental revenue to the airlines. It could be exit row seating, a preferred newspaper on-board, special in-flight entertainment, access to an airport lounge etc. In short, anything the customer would like to have... and pay for. Amadeus is supporting this trend by developing technological solutions to enable airlines to sell more ancillary services in the most efficient way to their customers.

A critical point for us is that the "a la carte" service process should be extremely customer friendly and also consistent across all channels: from all airlines' direct channels - websites, call centres or ticketing offices, airport kiosks - all the way through to travel agencies. This is what will boost the adoption of these ancillary services. This is what will provide the best customer satisfaction.

The challenge for us has been to build a solution that is flexible enough to offer all kinds of ancillary services, without making the booking / payment / ticket change process too complex. The sales agent or online customer must clearly see all of the services offered at the right moment during the booking process, along with their price.

Then the full booking, payment, ticketing, ticket change and schedule change processes need to be integrated, so that the airline can reliably deliver the services without generating a massive manual workload. In short, the introduction of new ancillary services impact many systems: the reservation system and all sales interfaces, the website, the inventory system, the revenue accounting system, the check-in system etc.

The other challenge - and maybe not the smallest - is for the airline. First, they have to select popular ancillary services that will be valued by the customer, and price them at the right level to maximise profit.

Then, they have to implement the delivery process for each new ancillary service. Some services like special seating can be delivered easily, but some others will require new complex logistics processes like special onboard delivery or special airport services. Finally, airlines need to promote the new services to the market place, in all relevant channels, and generate sales. Not that easy for some services that used be bundled into the ticket.

However, airlines and solutions providers are progressively overcoming those challenges. Amadeus has created multi-channel solutions for ancillary services. Our customer management solution - Altea - manages all the sales and airport interfaces and our e-Commerce solution enables an airline to sell and deliver a catalogue of ancillary services. Additionally, as a GDS provider, Amadeus can also cover the biggest part of the indirect channel with over 100,000 travel agencies worldwide.

So for an airline using Altea and the e-Commerce solution, it is only in non Amadeus travel agencies that ancillary services cannot be offered for the moment, while we wait for other GDSs to adopt industry standards.

Air Canada pioneered ‘a la carte' services. The airline used the e-Commerce solution that enables unbundling and upselling, leading to 45% of their domestic customers purchasing an upsell option. Since then, the solution has been industrialised and is available to other Amadeus e-Commerce airlines to sell from a catalogue of ancillary services - basically anything they want to sell and can deliver.

In a few months, we will have a solution in place to offer to all our airlines the ability to sell ancillary services, via our travel agencies using the Amadeus Retailing Platform. Amadeus Altea airlines will also be able to do the same in their own sales outlets.

I believe that as customers become accustomed to ancillary services, airlines will soon enjoy sustainable streams of extra revenues that are definitely most welcome in the current economic climate.

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