Revenue from non-ticket sources or ancillary revenue is critical for airlines in the current environment. With booking volumes through travel agencies predicted to decline by 2021, it is even more important for airlines to maximize their ancillary revenue through this channel. The launch of New Distribution Capability (NDC) thus comes as a boon for airlines as it will improve communication between airlines, travel agents and travelers. This increases the opportunity for airlines to sell their ancillary products and services, and enhances the scope for personalization as well. It thus improves their chances of capturing a large portion of the predicted USD 130 Billion ancillary revenue market by 2020. Analytics will play a major role in helping airlines glean valuable insights on customers' purchase and spend patterns on ancillary products and services by leveraging the data extracted from bookings made directly from airline websites. Airlines can accordingly push customized ancillary products and services when a search is made through travel agents. In order to customize ancillary products, airlines could take a page out of other service industries’ playbooks and adopt innovative strategies to gauge customer behavior and needs. This will allow them to personalize the experiences they offer. This WNS DecisionPointTM report outlines the following strategies for airlines to generate more revenue from ancillary products and services: Comprehend Your Customer Framework to evaluate the underlying behavior patterns of customers to generate offers Ancillary Revenue Maximization Matrix to segment customers based on their likely future behavior and offer ‘preference-based’ ancillary products For a closer look at how to maximize ancillary revenue, read the full report at: https://www.wnsdecisionpoint.com/our-insights/reports/detail/64/maximizing-ancillary-revenue

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wnsdecisionpoint.com
Maximizing Ancillary Revenue
The Power of Analytics for Airlines

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Airlines’ ancillary revenues grew more than 160% from 2010 to 2015
18.7
21.29
41.06
40.5
46.11
88.94
0 50 100 150
2015
2016P
2020P
Other Airlines 67 Airlines
76%
77%
74%
76%
78%
73%
75%
70% 72% 74% 76% 78% 80%
Wifi Access
In-Flight Entertainment
IN-Flight Snacks or Meals
IN-Flight Duty Free
IN-Flight Shopping
Respondent Average
Alcoholic Beverages
Satisfaction Index
Ancillary Segment Revenue Booster Higher Customer Satisfaction
Current and Predicted Ancillary Revenue
(USD Billion)
Effect of In-flight Ancillary Products on
Overall Passenger Satisfaction
48.4
42.8
5.6
Source: IdeaWorks Company, Travelport, Amadeus, WNS DecisionPoint™ Analysis Source: Airline Passenger Experience Association

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Focus on ancillary revenue varies across the globe and depends on the
business model
Ancillary Revenue Share – Full Service & Regional
4.8% 8.4%
Median Best in Class
Aeroflot
(2.8%)
Aer Lingus
(12.6%)
American
(11.5%)
Alaska Air
(19.5%)
Aeromexico
(4.8%)
Air
Astana,
PIA
(0.8%)
Air Berlin
(3.8%)
Air Canada
(6.2%)
AF/KLM
(7.5%)
Air
Greenland
(4.6%)
ANA All
Nippon,
Emirates
(0.5%)
Avianca
(1.3%)
British
Airways
(3.4%)
China
Eastern
(3.7%)
China
Southern
(0.6%)
Delta
(9.3%)
Ethiopian
(2.7%)
Finnair
(4.5%)
Garuda
(0.3%)
Hawaiian
(9.2%)
Korean Air
(8.7%)
LATAM
(7.7%)
Lufthansa
(5.5%)
Qantas
(12.3%)
Qatar
(6.1%)
Rex
(0.9%)
Royal
Jordanian
(0.7%)
Sun Country
(8.4%)
TAP
Portugal
(7.3%)
Turkish
(2.5%)
United
(16.4%)
Virgin
America
(10.9%)
Virgin
Atlantic
(4.9%)
Virgin
Australia
(5%)
Region Legend:
 Middle East and Africa
 Asia/South Pacific
 Americas
 Europe and Russia

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Airlines need to better package ancillary offerings irrespective of sales
channels
Pre-NDC
Post NDC
 Through GDSs, airlines know very little about the
behaviour of customers (how they shop, what all
products customers view before finalizing one of
choice, what is the length of stay on a page etc.)
 Airlines cannot provide personalized shopping
experience
 Search is primarily focused on price and schedule
 Travel agents can share personal details about traveller
like frequent flyer numbers and corporate identities
with airlines (should customers choose to share)
 Airlines know details about customers like who is
looking for fare differentials implying:
– Scope for personalization
– Shift search focus to value
New Distribution Capability (NDC) program launched by International Air Transport Association (IATA) is a new
XML-based data transmission standard which will enhance communication between airlines, travel agents and
travellers.
NDC will allow airlines to themselves create and personalize the offers themselves, irrespective of direct or indirect
channels.

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Further application of advanced analytics will enable better
personalization
Application Areas Key Objectives Data Sources Analytics Techniques
Predictive analytics
Web analytics, Visual
analytics, Speech
analytics
Campaign management
analytics, Web analytics
Predictive analytics
Social media analytics
Flight booking data, Customer
profile, Payment data, Loyalty
program usage, Ancillary spend
Flight booking data, CRM data
Customer profile (both internal
and external sources), CRM
data
Customer profile (both internal
and external sources), Ancillary
spend, Flight booking data,
Loyalty program
Social media sites (profiles,
comments, likes, shares)
 Cross sell additional ancillaries based on customer history and profile
 Display alternative offers based on preferred destinations and routes
 Figure out preferred channels for branding and promotional
communication
 Improve channel RoI by analyzing channel cost, transaction volume,
average fare, seasonality etc.
 Use internal and external sources of client data for efficient
marketing, sending the right promotion and marketing
communication to the right customer set using the right channel
 Segment demographic data to narrow down on potential high value
segments
 Analyze travel patterns and spending behavior to gauge future
propensity of generating high margin transaction
 Maintain a positive online/social media reputation by constant
monitoring of positive and negative mentions about the brand
 Collect data on customer expectations and customer grievances for
more effective and relevant customer engagement strategies
Ticket & Ancillary
Sales
Channel
Management
Targeted Marketing
Identifying High
Value Passengers
Social Listening
To know more about ancillary revenue maximization trends and strategies,
To download a copy of the report click here

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