Irish Influence – Driving Airline Ancillary Revenue in the Post-COVID-19 World

The ultra-competitive aviation recovery race post COVID-19 has dramatically prioritised the identification of new ways to increase ancillary revenue to strengthen airline’s financial positions.

Irish innovation is facilitating airlines in Australia, New Zealand and around the world to be first of the mark by increasing ancillary (non-traditional) revenues through enhanced customer engagement and real-time relevant offers. While Irish Influence has been providing the inside track experience to the airline industry in this region for decades.

One such influence is Alan Joyce, CEO of Qantas, who towers above all other airline professionals in terms of influence and recognition in Australia. His company, alongside Jetstar and Air New Zealand, has announced the ramping up of domestic flights to 40 and 55 per cent of its pre-pandemic capacity in July, while Virgin Australia has been taken over by US private equity group Bain Capital. 

Joyce, hailing from Tallaght, is a quintessential example of Irish business success abroad. He transformed Qantas from a company that recorded record losses of €1.92 billion in June 2014, alongside the grounding of their fleet and laying off more than 5000 members of staff, to posting multi-million profits ever since, including €780million in 2019. The company has since returned to the top 10 of the world’s best airlines in 2019 and was recently named Australia’s most desirable place to work.

The crisis that has engulfed the industry since March will challenge Joyce to perform similar heroics, he recently indicated that growth in ancillary revenue will be key to recovery, with key focus on initiatives like “personalisation“- to target customers with special offers and prices for their next journey.

Another Dubliner who has made his mark at Qantas rival Virgin Australia as CEO of Velocity Frequent Flyer, their ancillary loyalty business, is Karl Schuster. From 2015 he has overseen the doubling of membership from 5.3 million to more than 10 million, increased annual revenue to €255 million (€72m profit in 2019), and launched innovative and points-earning partnerships with Coles, Optus, Ola and Westpac.

At the same time, Jetstar’s ancillary strategy is orchestrated by Irish man Nigel Fanning, whose leadership as Group Head of Pricing and Revenue Management has consistently placed the low-cost carrier as the region’s largest ancillary revenue earner.

Recently implemented initiatives such as the ability for customers to purchase +3kg of extra baggage, upgrading from the standard 7kg carry-on-baggage was taken up by 600,000 customers, and a relaunch of the “manage my booking” option with optimised meal and seat selection options brought about a 8% growth in ancillary revenue from 2018-19 at an estimated value of $642m. Under Nigel’s tutelage 73% of bookings with Jetstar added an ancillary product in 2019.

The technology fuelling many of the aforementioned initiatives is of Irish descent, which has attracted a cluster of Irish travel tech companies to set up their APAC headquarters in Australia. The likes of Boxever, Cartrawler and Swrve have been able to leverage the experience of the 100+ Irish professionals embedded in the A/NZ airline industry including Alan, Karl and Nigel, allowing them to validate their technologies market readiness and to use the experience garnered in Australia as a springboard to further develop in the wider Asia-Pacific.

Boxever is a personalisation platform that uses data and AI to help the world’s biggest airlines make every customer interaction smarter and boost ancillary revenues. CEO David O’Flanagan believes that in today’s business climate: “good personalisation allows an airline to make the customer journey from shopping to purchase to flight as good as it can be. The key to this is rich, good, actionable data.”

In Australia Jetstar selected Boxever to do just this, and in just eight months the partnership resulted in an estimated revenue lift of €2.1million stemming from Boxever’s personalised urgent messaging function, as well as Increasing ancillary revenue of €450,000 from pre-return emails.

Working with Jetstar in Australia as well as new partners HK Express and Cebu Pacific throughout wider Asia-Pacific, has precipitated the establishment of a first regional presence in Melbourne for the company at the beginning of 2020.

CarTrawler provides technology for airlines to boost ancillary revenue by offering car rental, private airport transfers and on-demand ride hailing services at more than 55,000 locations in 178 countries.

Aileen McCormack, CarTrawler’s Chief Commercial Officer explains “The ANZ region is a core market for CarTrawler where we work with a diverse partner base including Jetstar, Virgin Australia, AMEX Australia and more recently we’ve launched a trial with Uber in Australia. As we see more positive signs of recovery globally and easing of travel bans, it’s important we enable people to move again. Our data helps us to do just this by providing our partner’s customers with the right product at the right time.”

The company recently shared details of their post COVID-19 recovery project, which has been designed to prepare Cartrawler and its partners for the bounce-back. As part of the project, CarTrawler is focusing on merchandising, customer relationship management and industry insights.

Swrve is a mobile customer engagement platform that enables brands to connect with their customers with individually personalised messages, delivered with AI-driven targeting and triggering at global scale. By combining messaging across channels like push, in-app messaging, web push, email, and SMS, airline customers Emirates and Ryanair, who Forbes describes as “The Kings of Ancillary Revenue”, leverage smart, AI-driven mobile campaigns to add millions of euro in non-traditional revenue through seat upgrades, lounge availability, fast track boarding, and more.

For example, Swrve facilitates Ryanair to use geotargeting, where customers receive a push notification with the option to purchase additional products such as express airport security passes when they are 5km from the airport. This campaign delivers 36% purchase success, compared to just 1% when the campaign is sent via email.

Scott Mirabello, Regional Director based in Sydney believes that Swrve is perfectly positioned to allow airlines to adapt to a multitude of new customer expectations. “Consumers are more connected than ever. Enterprises are not. Due to the current health environment, travellers are demanding better, more contextual communication from airlines around safety and scheduling,” he elaborates. “This presents a unique opportunity for brands in the travel industry to connect with customers with personalised, relevant information, that adds real value to journeys and experiences, while also increasing ancillary revenues”.

The richness of the legacy of Irish influence in the antipodean airline industry is apparent through the people who have had such an impact on its development over the last few decades. As airlines quickly pivot to broaden revenue streams, the baton is being passed from these people to the cutting-edge Irish tech companies leading the way in helping carriers remain profitable for years to come.

Stephen Mullan is a Market Executive for Enterprise Ireland in Sydney, Australia

To find out more about Irelands travel tech advantage, please take at our recently published white paper: Travel Tech:Maximizing revenue across the traveler’s journey

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