“Far too often, airlines have difficulty in assessing the overall value of the guest”

Apr 14, 2009

Exclusive: Sabre Travel Network on ancillary strategy

Published: 14 Apr 2009

Exclusive: Sabre Travel Network on ancillary strategy

Airlines need to be cautious about their ancillary strategy. They need to work on such initiative taking into consideration their core offering, which if not understood properly will not only make it difficult for airlines to execute it internally but it will also confuse their customers.

There are some ancillaries that are becoming relatively mainstream in air travel the world over, such as pay-for-seats and baggage fees, so it isn’t as dangerous for airlines to tiptoe into these opportunities, as long as they are cognizant of the impact on their brand.

A company like Sabre, which has a consulting practice in this space, acknowledges that it is critical to understand “how do we help the traveller assess the marketplace and find the right travel product for themselves when shopping”.

Sabre launched an industry first with Sabre Pay-For-Seats capability, which allows travellers to select premium seating for an additional fee. Sabre launched this capability with Midwest Airlines and is currently working with United Airlines on a similar capability.

This capability can be booked via airline’s website or through the Sabre global distribution system (GDS).

According to Sabre Travel Network’s Vice President and General Manager – Asia Pacific, Hans Belle, Sabre is also developing a tool called Attribute Based Shopping, which is designed to enable passengers and travel agents to compare and contrast airfares that include or exclude different product or service attributes.

These attributes include the paid extras that airlines are beginning to introduce as they unbundle their fares, such as seat selection, baggage charges, lounge access and on-board meals.

“We believe Sabre’s Attribute Based Shopping will make the travel shopping experience more efficient for agencies and travellers, while providing airlines the opportunity to differentiate, showcasing their value through product and service options,” Belle told EyeforTravel.com’s Ritesh Gupta.

Belle also spoke about signing partnership deals, assessing the overall value of the guest and much more in an interview. Excerpts:

With airline websites garnering millions of unique visits on a monthly basis and sizable opt-in e-mail subscribers, in your opinion to what extent airlines are ready to expand their product basket as suppliers try extracting the "overall value" of the guest?

Far too often, airlines have difficulty in assessing the overall value of the guest. Without that, it is really just window-dressing. In fact, a core attribute of SabreSonic Customer Sales and Service (CSS) is meant to address this very issue. Taking a customer-centric view of a sales opportunity, combining that with insight into the airline’s revenue, then determining what offers are appropriate to that customer given supply/demand issues, as well as that customer’s personal needs is the harbinger of why we’re seeing success with SabreSonic CSS.

Experts say ancillary services can be divided into three main areas – what is traditionally called non ticket revenue as a la carte services (like charging for extra leg room seats), frequent flyer mileage sales and commission from third party services. What factors should an airline take into consideration while going for these revenue options?

From our experience, airlines have greater success with things that the consumer believes that they, the airline, can uniquely deliver – in-flight services, access to premium products, etc. This is not to say that non-core ancillaries are unworthy of pursuit. But, airlines keep more of the price premiums associated with their own products. They have more pricing control. And, it weds the consumer more to them. This is a capability airlines can achieve through Sabre Pay-for-Seats.

The leaders in ancillaries are always ready for widening their product basket and seeking the next extension to the product set that will drive revenues. What do you think is critical in sustaining the balance from your core product perspective?

There are several old adages in this area… stick to your knitting, build around your core competencies, etc.

What successful airlines have often found is that they can extend farther if they partner for the things that are not core, extending themselves around their core competencies. As an example, airlines often – appropriately – outsource the sale of non-core items such as car and hotel, partnering with firms like Zuji, Expedia, Travelocity, etc. Then, they extend themselves on things like the sale of premium seats, checked baggage, and even lounge access. These are things where they are the experts, and they do it themselves. Where they are not the experts, it more often makes sense to outsource, extend through partnership.

What do you recommend when it comes to signing partnership deals?

Working relationship, track record, depth of content, quality of content (e.g., do they offer competitive prices), strength of service – to both the airline and the end-consumer are all important. Still, the thing which most often breaks partnership is discontinuity among the partners on what defines success. Accordingly, often, the most important aspect is goal alignment between the partners.

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“Far too often, airlines have difficulty in assessing the overall value of the guest”

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