tag:blogger.com,1999:blog-34367341.post1302155972435363580..comments2023-10-26T01:26:46.721-07:00Comments on Professor Sabena's Blog: Ancillary Revenue’s Achilles HeelProfessor Sabenahttp://www.blogger.com/profile/13836115173131048934noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-34367341.post-53628460204141261452010-02-13T17:12:48.760-08:002010-02-13T17:12:48.760-08:00I agree with you Professor, and would add that anc...I agree with you Professor, and would add that ancillary revenue can cover quite a number of things. FFs may be exempt from bag fees, but large airlines earn up to $1billion a year in loyalty-based ancillary revenues, mostly coming from co-brand cards. <br /><br />As I tried to instruct travel agents at a recent ARC webinar and at the Business Travel Show in London last week, tremendous opportunities exist for cross-selling merchandise post booking/pre-departure.<br /><br />Dynamic packaging is an expensive process and it has only shown that the average customer will buy limited extra items such as hotel or car at time of booking. Pre-selling food is complex and costly and the jury is still out on any success there. However, using existing data to push relevant up-sell and cross-sell offers often only require basic analytics and updating email campaigns.Unknownhttps://www.blogger.com/profile/10455555692187063414noreply@blogger.comtag:blogger.com,1999:blog-34367341.post-72451169589974243512010-02-13T08:51:28.346-08:002010-02-13T08:51:28.346-08:00While I will take a mea culpa on the issue of the ...While I will take a mea culpa on the issue of the transaction review vs ticket review, I will still stick to my guns on the overall issue behind the article. It remains critical that the whole process for AR needs to go to the agency as a channel and not rest with the airline alone. I will further clarify that the lack of agency fulfillment is forcing other behavior such as taking the bags to the gate where no charge is levied. <br /><br />If there is death by a thousand cuts lets just make sure we understand that many FFs dont pay charges because they are exempt. Trip lengths have become shorter therefore the need for the bags are less. Other charges may not appear on the corp card because corp's dont like to pay for them. In Europe certain countries now do not permit more than one bag in the cabin - not to mention certain airlines like easyJet and Ryanair. Finally for ghost card holders the charges would not appear as the traveler doesn't have a physical charge card on which to place the charge. <br /><br />What was not clear was the time period when the survey was taken and indeed on which type of clients.<br /><br />In general therefore I would argue that the percentage of these transactions does not have to be great to make a dent on the bottom line of an airline. But as we have seen from American Airlines recent standby charge fee imposition - there will be a way for these numbers to go up. As long as there is no agency fulfillment then the airline stands to lose out as does the agency. Therefore once this is sorted out the agency and the airline will both be able to share in the revenue stream even if the hapless customer - both corporate and leisure - is the one footing the bill. <br /><br />One final comment. It would be VERY interesting if TRX was to tell us how much of the corp agency tickets have a fee applied and what is the amount in real and percentage terms. Because I would bet a large drink that the total amount of fees that are a percentage of the Corporation's travel budget is a number that has increased over the years. Further with the reduction in ticket cost of corporate based fares the percentage of total fees has increased significantly.<br /><br />CheersProfessor Sabenahttps://www.blogger.com/profile/13836115173131048934noreply@blogger.comtag:blogger.com,1999:blog-34367341.post-24093652766003594002010-02-13T05:40:19.140-08:002010-02-13T05:40:19.140-08:00Sorry, Professor, but the whole premise of your po...Sorry, Professor, but the whole premise of your post is wrong. As you will see if you check The Beat's article again, TRX's research did not cover "transactions that they process" with their agency technology. <br /><br />It was their data consolidator and reporting service at play, not transaction processing. This means the chunk of data they examined comes from a portion of their corporate clients' card charges, TMC transactions <i>and</i> expense management feeds. Not only does this mean it's a different set than transaction processing (ie heavily corporate vs. more leisure) but also it means they in fact are capturing things like bag fees paid at the airport on plastic by the travelers. <br /><br />Now, does that 1 percent seem like a very low number? It does, but we should keep in mind that bag fees represent the largest portion of the opportunity these days and most very frequent travelers are not paying for bags. As you note, if the airlines, GDSs and travel agencies can get their acts together on offering optional services, the figure is sure to grow.<br /><br />Thanks for the opportunity to clarify, and for the tip on the Travelport document.Jay Campbellhttp://www.thebeat.travelnoreply@blogger.com