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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.

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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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