Amadeus Solution Showcase Asia Pacific · Note: Conversion rates may be overstated if outbound...

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Amadeus Airline e-Commerce Suite

Amadeus Solution Showcase Asia Pacific

How and when you sell ancillary items is more important than what you sell.

Martin Collings, Amadeus Airline IT

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Optimizing ancillary revenue conversion

� Understanding timing

� Booking window

� Seasonality

� The Bow Tie Model

� Hotels case study

� Air Pacific

� The next big thing?

� Destination content

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US Carriers say shorter booking window – but wait for the next slide…

“Our forward booking curve is moved closer to departure as

customers have been deferring purchase decisions”

David Barger, CEO, JetBlue, 29 Jan 2009

“We’re also seeing the booking window narrow which makes our forecast more

difficult to predict.”

Richard H. Anderson – CEO, Delta, 27 Jan 2009

Less visibility that we’re seeing, closer end

bookings, everything that that means as well.

That usually means less change fees because people are booking closer in.

David Barger, CEO, JetBlue, 23 April 2009

On the revenue side, travelers continue to book much closer to

the time of travel, making projections difficult.

Maurice J. Gallagher, CEO, Allegiant 20 April 2009

“We did see more close-in bookings in December and in January”

Laura Wright, CFO, Southwest, January 22, 2009

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For rental cars and hotels, the bigger the bracket, the less ancillary revenue!

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Da

ys f

rom

pu

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ase t

o c

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tio

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Air 2007 Air 2008 Air 2009 Car 2008 Hotel 2007 Hotel 2008 Hotel 2009 Isango 2008

Air 46 days = 2 year weighted average of over 80 airline websites. Hotel (24 days) & Car (23 days): 2 year weighted average from airline and some OTA websites,

but much smaller sample size than air. Destination content is Isango (30 days) 2008 weighted average from all internet sales channels.

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Putting it into context – with limited resources, where should the airline focus?

12 Travel searches*

22 Travel websites*

Social network sites

Friends & family

Offline advertising

Govt Tourism Boards

Source *: Google cited at http://www.travolution.co.uk/blog/2009/04/googles-four-steps-to-better-u.php**: Google at http://www.ustravel.org/resources/Travelcom/TC09/Presentations/Rob_Torres.pdf

47 days** 46 days

$ $ $ $$$

$$

$

$

Airlin

e first and f

ore

most.

Oth

ers

pic

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lack

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� Booking window

� Seasonality



� Air Pacific



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Case Study: Air Pacific (FJ) - 1 of 3

� Fijian flag carrier

� Existing hotels contract with private label (white label) website

� Doing more innovation in optimizing ancillary revenue conversion than most people in the room today

� Phase 1 – Basic hotels offer

� USD, AUD, NZD templates

� Inbound pax only

� Immediate results

� What impact did this have on AirPacific.com hotel bookings?

Hotel Hotel

SalesSales

Tripled!Tripled!

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Air Pacific, Fiji

Only 6 planes,But an innovator in ancillary revenue

Itinerary and e-ticket email is delayed by

a few minutes, so this is the first

confirmation email passenger sees –

the perfect time to

cross sell hotels!

HTML email

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Case Study: Air Pacific (FJ) - 3 of 3

…but to really understand this, one needs to dig into the detail

Yes, number below is conversion rate (sales), not click through rate

Average conversion rate (May 2009) 3.0%

POS Australia, AUD template 4.2%

POS USA, USD template 4.4%

POS New Zealand, NZD template 0.6% Why?

Note: Conversion rates may be overstated if outbound hotel sales are significant, but this is not believed to be the caseNumbers above were calculated on sales from marketing activity sent in May plus first two weeks of June 2009

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How to improve hotel sales even more – use even greater segmentation

IF at least one child in PNR THEN

IF RBD = Discount economy THEN

show hotels A3, B3, C4, D4

ELSE show hotels C4, D4, E5, F5

ENF IF

IF length of stay 1-4 nights and not weekend THEN


show hotels G3, H3, I4, J4

ELSE show hotels I4, J4, K5, L5

END IF


show hotels M3, N3, O4, P4

ELSE show hotels O4, P4, Q5, R5

END IF

END IF

END IF

Children

Business

The Rest

Three Star

Family Hotel

Four Star

Short Stay

Five Star

No Kids

Holiday

{

{

{

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And in Call Centres too!

� No increase in average call time

� No increase in training

� What % of sales contain an email address?

� Example

� Insurance

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� Booking window

� Seasonality



� Air Pacific



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Destination content – is it the next big thing?

� Maybe, but there is one thing I am sure of

� No airline has yet perfected the selling of this product

� Attach rates on some airline sites are under 0.1%

� They either buy from you, or when they arrive

� You know where and when they are going

� You know who is going (family/couple/solo)

� You know their service preference (eco/biz)

� Requires opt-in (some opt-in results > 70%)

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A Hypothetical Example for KL…followed by the revenue projections

Scenario: Two adults spending one week in Kuala Lumpur

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Sandakan Orang Utan Rehabilitation CentreSubject

From:

To:

[email protected]

[email protected]

Dear Mr Smith,

In three weeks your flight XX123 leaves for Kuala Lumpur. If you have 8 hours free one day, a must see is this sanctuary for about 25 young and orphan Orang Utans apart from 60-80 other Orang Utanswho roam freely in the reserve. It is the largest Orangutan sanctuary in the world.

€62 pp inc hotel pickup

Click here for many other experiences in KL starting at under €20 per person

Three Weeks Prior To Departure

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Kuala Lumpur by Night Subject

From:

To:

[email protected]

[email protected]

Dear Mr Smith,

In two weeks your flight XX123 leaves for Kuala Lumpur. Other passengers of ours always speak highly of the night bazaar in Petaling Street in Kuala Lumpur’s Chinatown..This 4 hour tour also includes a traditional Malay feast.

€30 pp inc hotel pickupClick here for many other experiences in KL starting at under €20 per person

Two Weeks Prior To Departure

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Fireflies Tour in TerengganuSubject

From:

To:

[email protected]

[email protected]

Dear Mr Smith,

In one week your flight XX123 leaves for Kuala Lumpur. The fireflies in Terengganu have created one of the most fascinating natural wonders in Malaysia; every nighthundreds of fireflies light up these mangrove swamps with their fabulous synchronized flashing patterns.

€32 pp inc hotel pickup


One Week Prior To Departure

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Airport transfer to and from your hotelSubject

From:

To:

[email protected]

[email protected]

Dear Mr Smith,

In two days your flight XX123 leaves for Kuala Lumpur.

To make your journey as hassle free as possible, we can offer you a two way transfer to and from your city hotel. Many other passengers also take this option to ensure their arrival in KL is as smooth as possible.

€17 per person

*this transfer example is based on a Singapore product


Two Days Prior To Departure

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Potential Revenue

Orangutans €62

Night Tour €30

Fireflies €32

Hotel Transfers €17

Total (one, then two persons from PNR) €141 €282

€22.56Airline Commission (assume 8%)

Scenario: Two adults spending one week in Kuala Lumpur

Direct channel PNR’s per year 200,000

Opt-in rate 70%

- PNRs that can be targeted 140,000

Conversion Rate 2%

Annual Airline Ancillary Revenue €63,168

3,000,000

70%

2,100,000

2%

€947,520

Note: Potential revenues have not accounted for additional purchases a passenger may make when clicking through on the email,

so they may be conservative estimates.

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Who wants to sit around the table and really get serious about optimizing ancillary revenue conversion rates?

� Only major airlines

� Only high internet penetration sites

� Only 1A hosted

� Only airlines serious about maximizing ancillary revenue

��

�

Amadeus Solution Showcase Asia Pacific · Note: Conversion rates may be overstated if outbound...

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