1.
2016 AIRLINETRENDS.COM
MONETIZING DIGITAL PLATFORMS DURING THE INFLIGHT TRAVEL PHASE
FTE ANCILLARY, 26 JUNE 2017
RAYMOND KOLLAU | FOUNDER AIRLINETRENDS | RAYMOND@AIRLINETRENDS.COM | +31 6 4186 1136 | WWW.AIRLINETRENDS.COM

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2016 AIRLINETRENDS.COM
AIRLINE TRENDS
TREND RESEARCH
& PRESENTATIONS
INNOVATION
WORKSHOPS
INSPIRATION CONCEPT DEVELOPMENT

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2016 AIRLINETRENDS.COM
INFLIGHT ANCILLARIES » HOW AIRLINES CAN MONETIZE THEIR INFLIGHT ENGAGEMENT PLATFORMS
As ancillary revenues are on the agenda of every airline, much has been
written and said about the grand vision of airlines as omni-channel retailers,
in which the in-flight part is just another touchpoint in an end-to-end,
personalized, seamless, digital travel eco-system.
However, as airlines are only just embarking on this merchandizing journey,
we take a look at the current state of inflight retail, which sees the opening
up of a cabin environment that was previously ‘closed’ because of
proprietary IFE platforms and the lack of Internet connectivity.
At this year’s Future Travel Experience event in Dublin, AirlineTrends
founder Raymond Kollau delivered a presentation on ‘How can we enhance
customer experiences and revenue opportunities during the inflight phase of
travel?’
Below is the outline of our talk, illustrated by several few examples of how
airlines are tapping into the changing consumer behaviour and expectations
of today’s connected travellers.
FROM IN-FLIGHT ENTERTAINMENT TO IN-FLIGHT ENGAGEMENT PLATFORMS
Android-based in-seat IFE platforms, wireless IFE, Internet connectivity, plus the large
number of passengers – and increasingly cabin crew as well – that carry a digital device,
provides airlines with much more control how to move beyond providing just
entertainment to new opportunities to generate ancillary revenues in-flight.
Jeff Standerski from Rockwell Collins summarizes this evolution nicely: “Passengers’
expectations have evolved from a passive ‘Please entertain me’ to a proactive ‘I want to
entertain myself’. Our industry needs a new term to describe a holistic experience that is
equal in every way to how people leverage their devices on terra firma. The future of the
passenger/cabin interaction is beyond one of mere entertainment and can be more
accurately described as one of deep and ongoing engagement: In-Flight Passenger
Engagement.”
A similar vision is painted by Thales CFO Fred Schreiner: “We are going to go into a
period where it’s about engagement. How do we move from an in-seat system, where an
airline is looking at cost line, to an in-seat solution coupled with connectivity that moves
to a revenue line?” Schreiner said families will be able to plan their holidays from the
seatback: booking restaurants and exploring street level views of a city’s sights.
Eventually this means that this new ‘inflight engagement platform’ – be it seatback
systems, inflight wireless portals or mobile apps – will become another touchpoint in the
airline travel ecosystem.

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2016 AIRLINETRENDS.COM
IN-FLIGHT COMMERCE
And with the proliferation of e-commerce, passengers have come to expect self-
service and an on-demand environment up in the air. Besides allowing
passengers to order food and beverages from their seat, this means that rather
than making money from selling wi-fi connectivity, airlines should be turning to
third-party merchants with last-minute inventory – such as hotels, restaurants,
duty free retailers, transportation companies, sellers of event tickets – to develop
a retail environment as part of their in-flight Internet portals.
Finnair ‘Nordic Sky’ | Finnair, for example, has put its new ‘Nordic Sky’ inflight
portal to work as a channel to offer new services to flyers, as well as boost
ancillary sales. The portal can be accessed on passengers’ own devices and
gives all passengers free access to finnair.com, plus Finnair services such as
destination information, customer care and pre-order duty free shopping— with
items purchased being delivered to the passenger’s seat on their return flight.
Passengers can also use the inflight portal to order taxis via Cabforce on in-
bound Helsinki flights, or book destination services such as trips, dinner cruises
and concert tickets with Viator Destination Services. The airline is also
considering to let passengers pre-order their groceries inflight.
Lufthansa x Frankfurt Airport ‘Inflight Shopping’ | An early example of
collaborative retail comes from Lufthansa and Frankfurt Airport. Passengers on
in-bound long-haul Lufthansa flights can pre-order a selection of duty free from
retailers at the airport via the Lufthansa inflight portal and have their orders
delivered to them by the airport’s ‘runners’ at their arrival gate.
LEVEL ‘Pair & Pay’ | With regard to the on-demand trend, IAG’s new long-haul low-cost carrier
LEVEL is one of several long-haul LCCs such as Norwegian and Azul to allow passengers to
order food, beverages and travel accessories via the in-seat IFE system and pay with their credit
card via a solution called Pair & Pay.
LoyaltyLobby describes the Pair & Pay system as follows: “After selecting the items on the screen,
you got the choice to pair the screen purchase with your WiFi connected device and to pay using
the card info stored on your profile. The buying experience is seamless and so easy. Those not
willing to open an account could order their items and pay to a flight attendant using their card.”
Meanwhile in China | Meanwhile in China, airlines are more opportunistic in their efforts to
monetize in-flight digital platforms. Air China has partnered with online retailer JD.com to offer
passengers a selection of goods they can purchase via the in-seat IFE system for delivery to their
homes, while Spring Airlines is working is working on an inflight portal that allows for online
shopping on international flights.
China Eastern’s ‘In-flight Mall’ onboard it’s Boeing 777-300s enabless passengers to order meals,
pay for upgrades onboard, and purchase duty free items through the seatback screen,
passenger’s personal devices or tablets that are provided by the crew. The sidewall of one of the
galleys also features a duty-free showcase, which displays a selection of the duty free items
available for purchase onboard.
RE-INVENTING ONBOARD RETAIL
As IFE systems are evolving into digital platforms, airlines have the opportunity to reinvent inflight
service and retail. Or as trendwatcher James Woudhuyzen puts it in a straightforward way: “Sell
things people actually want to buy, so when the flight attendant announces ‘Duty Free Goods’ it
isn’t in a tone that shows she fully expects zero sales.”
INFLIGHT ANCILLARIES » HOW AIRLINES CAN MONETIZE THEIR INFLIGHT ENGAGEMENT PLATFORMS

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2016 AIRLINETRENDS.COM
“THE LONGER UBER HAS BEEN IN A CITY, THE LESS
WILLING TO WAIT FOR A CAR PEOPLE BECOME.”
ON DEMAND: EXPECTATIONS
TIME COMPRESSION, LAST-MINUTE LIVING

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2016 AIRLINETRENDS.COM
INNOVATION AT HILTON: CHOICE, CONTROL

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2016 AIRLINETRENDS.COM
AUTHENCITY: LOCAL DESIGN
STARBUCKS: PRE-ORDER & PAY » PICK-UP

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2016 AIRLINETRENDS.COM
“Airlines make less profit per passenger than Starbucks
makes from selling a coffee and a sandwich.”
- Prof. Nawal Taneja, Ohio State University
HOW TO ESCAPE COMMODITIZATION?
2013
$3.37
2014
$4.94
2015
$10.08
2016
$9.13
NET PROFIT PER PAX
(SOURCE: IATA)
2017
$7.69
*
N-AM $16.32
A-PAC $ 4.96
EUR $ 6.94
LATAM $ 2.87
M-EAST $ 1.78
AFR -$ 1.50

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2016 AIRLINETRENDS.COM
PASSENGER EMPOWERMENT TODAY

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2016 AIRLINETRENDS.COM
IN-FLIGHT ENTERTAINMENT

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2016 AIRLINETRENDS.COM
CONNECTIVITY

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2016 AIRLINETRENDS.COM
SOURCE: WILL HORTON
GALLEY = CREW DOMAIN

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2016 AIRLINETRENDS.COM
MEANWHILE…

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2016 AIRLINETRENDS.COM
AIR NZ
EX3 (B787)

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2016 AIRLINETRENDS.COM
PAX EMPOWERMENT

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2016 AIRLINETRENDS.COM
AIR NZ (IFE-BASED ORDERING)

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2016 AIRLINETRENDS.COM
ON DEMAND: NORWEGIAN B787
“Our passengers love the ease and flexibility. The crew also love it and report that the cabin is quieter.”
- Boris Bubresko, Head of Business Development Norwegian

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2016 AIRLINETRENDS.COM
MONETIZING INFLIGHT PORTAL
“We have decided to have a route-based
selection for the goods, as onboard
technology makes that tailored retail
experience possible.”
- Juha Järvinen, CCO, Finnair (APEX 09.15)

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2016 AIRLINETRENDS.COM
RETHINKING DUTY FREE

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2016 AIRLINETRENDS.COM
LUFTHANSA ‘FLYNET PORTAL’

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2016 AIRLINETRENDS.COM
BEYOND DUTY FREE
– Lufthansa Magazine, 03.16
“As a next step, wel will increase our personalized
services along the entire travel chain by […]
offering pick-up and delivery services and
also a virtual supermarket enabling you to purchase
food on board when your fridge at home is empty
– to name just a few examples.”

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2016 AIRLINETRENDS.COM
GROCERIES: INFLIGHT AS DISTRIBUTION CHANNEL
MELBOURNE AIRPORT
HELSINKI AIRPORT

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2016 AIRLINETRENDS.COM
WHO NEEDS DUTY FREE WHEN YOU HAVE ACCESS TO AMAZON?

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2016 AIRLINETRENDS.COM
BUY ON BOARD ‘ENGAGEMENT’DESTINATION CONTENT (OFFLINE)

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2016 AIRLINETRENDS.COM
LAST-MINUTE LIVING
“The on-demand customer segment is growing and these
customers are increasingly making travel choices closer to
departure as the digital eco-system enables them to do so.”
“Onboard last minute, personalised ancillary sales meet this
growing customer need and in-flight Wi-Fi […] enables real-
time sales and fulfilment of in-flight ancillary.”
- Dianne Parry-Ernst, Manager Direct Ancillary Revenue, Air New Zealand (FTE 06.17)

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2016 AIRLINETRENDS.COM
FROM TRENDS TO CONCEPTS
Our hands-on PAXEX360 workshops help airlines and industry suppliers
create innovative and relevant concepts that respond to today’s
consumer needs and industry trends.

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2016 AIRLINETRENDS.COM
WE LOOK FORWARD HEARING FROM YOU
Raymond Kollau
Founder AirlineTrends
Trends & Industry Analyst
raymond@airlinetrends.com
Pauline Hoogervorst
Airline Management Consultant
Customer Experience Innovation
pauline@airlinetrends.com
Daniel Baron
Founder LIFT Strategic Design
Brand and Cabin Design
daniel@lift.aero
A wide range of
clients throughout
the world:
LEARN MORE:
www.airlinetrends.com/paxex360

28.
2016 AIRLINETRENDS.COM
MONETIZING DIGITAL PLATFORMS DURING THE INFLIGHT TRAVEL PHASE
FTE ANCILLARY, 26 JUNE 2017
RAYMOND KOLLAU | FOUNDER AIRLINETRENDS | RAYMOND@AIRLINETRENDS.COM | +31 6 4186 1136 | WWW.AIRLINETRENDS.COM