The New World of       Travel Merchandising               Tom Bacon Consulting                 December, 2011©2011 Tom Bac...
Airline Commodization                             Travel                          Distributors:                           ...
Airline Commoditization  ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential.   3
Airline Differentiation                            New Value                              Added                           ...
Airline Differentiation                                            New ancillary fees:                                    ...
Travel Merchandising                                                                     Travel                           ...
Travel Merchandising• Most travel suppliers have not  recognized the shift in customer                                Trav...
Travel MerchandisingARE YOU FULLY                                                 TravelEXPLOITING THIS NEW               ...
Tom Bacon Consulting                   Revenue Optimization30 Yr Track      …across theRecord of        Travel IndustrySuc...
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Travel merchandising overview

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I am speaking at a Revenue Mgmt and Travel Merchandising conference in London. Travel merchandising is certainly a huge opportunity for airlines and other travel suppliers. I will discuss learnings from Frontier Airlines and others. Pricing and revenue management play a critical role.

Published in: Business, Travel
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Travel merchandising overview

  1. 1. The New World of Travel Merchandising Tom Bacon Consulting December, 2011©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 1
  2. 2. Airline Commodization Travel Distributors: Price Focus Successful Third Airlines MatchParty Distribution Fares; Cut Costs Commodization: Svcs Cut; No Differentiation ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 2
  3. 3. Airline Commoditization ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 3
  4. 4. Airline Differentiation New Value Added Services Airlines MatchSuccessful Direct Lowest Fares; but Distribution Offer Customization New Customer Engagement ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 4
  5. 5. Airline Differentiation New ancillary fees: • Allow fare match with LCC’s Ancillary • Introduce new revenue streams$ Service Fees o Increase total revenue • Provide customers with new choices All o New customer engagement Inclusive o Reduce costly behaviors LCC Fare • Tend to drive traffic to website Match o Not fully supported by third parties Full-Service New Ancillary o Lower cost distrib channel Fares Svcs …AND… ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 5
  6. 6. Travel Merchandising Travel INTRODUCING Merchandising A WHOLE NEW WORLD E-commerce; CRM; Ancillary OF AIRLINE Service MARKETING Science of Choice Fees All Market Trvllr Inclusive Generic Segmentation ID’s LCC Fare Match Freq Branded Personal- Sell-up FlyerFull-Service New Ancillary Fares ization PerksFares Svcs ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 6
  7. 7. Travel Merchandising• Most travel suppliers have not recognized the shift in customer Travel needs Merchandising• Allegiant Airlines, however, positions itself as a travel merchandiser – not E-commerce; CRM; simply an airline Science of Choice Market Trvllr Generic  Advertising, referrals, non-air Segmentation ID’s promotions include hotels, car rental, and events Freq Branded Personal-  30% of revenue is not fare- Sell-up Flyer related (2X airline average) Fares ization Perks ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 7
  8. 8. Travel MerchandisingARE YOU FULLY TravelEXPLOITING THIS NEW MerchandisingWORLD? E-commerce; CRM; Ancillary Science of Choice Service Fees Market Trvllr All Generic Inclusive Segmentation ID’s LCC Fare Match Freq Branded Personal- Sell-up Flyer Fares ization Full-Service New Ancillary Perks Fares Svcs ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 8
  9. 9. Tom Bacon Consulting Revenue Optimization30 Yr Track …across theRecord of Travel IndustrySuccess PricingPricing & Rev $20 B Global * Revenue MgmtMgmt Airline * Ancillary Service FeesSchedules/ >$1 B Low Cost * Revenue ForecastsRoute mgmt Carrier REVENUEMkg, Sales, & >$1 BDistribution Independent OPTIMIZATION Regional Airline Planning Product * Network MgmtFP&A Travel * Profit Mgmt * New Markets Distributor (IT) * IT Systems * Distribution / * Corp.Developmt e-commerce ©2011 Tom Bacon Consulting, LLC. Proprietary and Confidential. 9
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