RyanAir’s recent announcement of top-secret plans with Google on a ”new flight search product" caught my eye. Mainly because I doubt there’s a big top-secret product Google’s launching exclusively with RyanAir. The CEO seems to me to be describing Google Flight Search, which has been live for 2+ years and contains lightning-fast pricing results from many major U.S. and European airlines already. But, the fact is that Google Flight Search hasn’t had the predicted bang in online travel that everyone was talking about when they launched.
RyanAir's PR efforts aside, I do see a significant uptick in online flight innovation coming in the next few years. Innovation in hotel online marketing has dominated the conversation recently. Which makes sense since hotels continue to drive the majority of profit for intermediaries and distribution partners. But flights is making a comeback. Here is why:
Airlines ancillary revenue strategies are paying off
While too many consumers still perceive ancillary revenue as “bag fees,” in fact airlines have diversified revenue streams in much more interesting, complex ways that are driving value for consumers and meaningfully improving airline economics. Programs like JetBlue’s Even More “check-in-to-arrival” premium experience, Delta’s Economy Comfort expansion and many others are driving hundreds of millions of dollars in previously unseen revenue.
Shifting from a “one size fits all” offering to a diverse set of passenger options (such as seat location and boarding priority) has created more revenue scenarios for different traveler types. And consumers are showing a willingness to pay for it. Ancillaries in combination with a data-driven ability to better manage capacity/passenger load refinements have had a huge impact on airlines’ bottom lines and will continue to do so.
The need for innovative ways to market and sell these products is creating opportunities for new entrants
Airlines have done great jobs with this on their own websites. But their traditional marketing and distribution partners aren’t keeping up. As one senior airline exec told me, “I can fill seats on my planes. I’m not looking for partners who can help us with that. I’m looking for partners who drive higher revenue per passenger for us.”
From a customer acquisition perspective, here are some of the ways to do that:
Big data is enabling more customized experiences for travelers.
Seatguru was an early leader in exposing more data and insight to guide the flight shopping process. Now, airlines are creating much more customized shopping and flying experiences by analyzing hundreds of customer data signals. For example, British Airways’ Know Me program analyzes historical data on individual flyers to enable their booking engine and gate agents to better predict the experience & service a flyer wants.
And companies like Hipmunk and Routehappy are collecting and analyzing complex sets of airline data, social graphs and customer reviews to automate the hard work of flight shopping. They’re producing the “best results” for an individual flight shopper rather than just list all the options available.
We’re confident we’ll see continued innovation from the airlines, from Google and from many new entrants that will benefit consumers and airlines alike.