There is no going back. The old inflight commercial model for airlines doesn’t work anymore.
Expectations and customer behaviours have changed dramatically over the last months and have accelerated the need for digital transformation in the overall customer experience.
So, if the business of duty free sales on board is based on printing and handling thousands of catalogues, fixing a limited and mostly exchangeable product assortment with no flexible pricing for the next three months (based on assumptions), paying a minimum guarantee on something you can’t control (crew and airline marketing), and then dealing with the leftovers that haven’t sold, you have to ask: how on earth do you make money?!
On top of that, when you can compare prices from a duty free catalogue to e-commerce stores, it makes this old form of business even more questionable – when you can buy almost everything cheaper at any online store and get it delivered to your home.
So, what next?
No one buys a ticket to go shopping on a plane or at an airport. Airlines provide the passenger traffic. They have an advantage over airports with their loyalty programmes and an early involvement in the search and browsing of a potential traveller. Yet the airports have made far more money from travel retail than any airlines for many, many years.
Now, as we emerge from the COVID-19 crisis, and as the industry slowly begins its recovery process, it’s time for airlines to wake up and monetise their advantage in creating early engagement and offerings. Most decisions are made pre-flight now and the layers of distraction during travel don’t especially engage shopping on the go.
This has been confirmed by the latest research on passenger behaviours, which has been done by AOE and Bridgeable focus groups. One of the most important feedbacks from passengers is the need for real time information and transparency in navigating ”touch-free” through their journey on their own device. This comes as no surprise, nor do the other findings. But one thing stands out with a big question mark from passengers: why is it that airports and airlines are not moving towards an integration of communication? They do not want to use different apps navigating on their day of travel.
Everything should start and end with the customer in mind. Digital commerce is a cultural shift in mindset that has to be adopted now to meet changing customer needs.
Experience commerce creates new possibilities how to connect passengers, airline and brands in a consistent way at every contact point. In this new connection, conversions can be increased in combining the right mix between advertising and promotions, loyalty and e-commerce.
It is much more interesting for a brand to spend advertising and promotion budgets on a platform where you can actually measure the conversion and customer purchasing behaviour. It’s much easier to replace poor selling products to better selling ones and offer dynamic prices based on demand.
This opens up new possibilities to learn about your customers preferences and personalise offers that meet their needs – instead of pushing a limited number of products on a trial-and-error system down the galley.
In fact, as we all know, some premium brands are far more willing to be sold online than onboard.
Going one step further, this enables you to create a marketplace and get a wider product portfolio to a wider customer base, and so become a trusted travel brand, offering a variety of new products and services. Integrate the offers – like food and beverage, duty free and services on the one platform.
Think big and start small.
Consider implementing a pre-order and home delivery pilot scheme for inflight.
A Minimum Viable Product takes less than a couple of months and can be done on a shared risk, with a transactional business model. It can be that simple. It is cost efficient and fast to test.
Importantly, this hardly needs any integration and can be set up generating income from sales through e-commerce and marketing spend from advertising partners immediately.
Seeing some airlines currently having an ‘Out of Order Shop’ banner on their travel retail shop websites makes one wonder: just how long do you want to lose out on these revenues?
Think about it, you can still sell products without pushing a trolley down a galley.
If there is surely a time to innovate, it is now!