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Tuesday, March 24, 2009

CASMA Dallas - Howdy !

Hello from Dallas where we are covering the CASMA conference for our loyal readers. The conference is definitely a big step up from the last one in New Zealand – both in terms of content and participation. Still down from the good ol' days, but we think you will see attendance down across the board throughout this entire year.

The conference started off pretty strong, with a panel of airlines talking about Merchandising and Ancillary Revenues. And the best part was that they actually had good hard facts ! Or, as they say in Big D, "Yee Haw!"

- Mark Mees of Air Canada stated that 47% of all passengers buy up from the Tango fare class to Tango-Plus class or higher. He didn’t specify the breakdown between Leisure or Business passengers, but that’s still good info.

- A very interesting set of numbers is that Air Canada generated over $245 Million in Ancillary Revenue in 2008. However, AC also allows a passenger to "opt out" of certain services to get a lower price ($5 off if you don’t check a bag, $3 off if you don’t want any miles, etc). Mees stated that passengers opted out to the tune of approximately $500K. When compared to $245 million – that’s not too bad, and they surely earn some goodwill for allowing their customers this simple choice.

- Jim Young of Frontier actually broke down the upsell-rate by channel. 38% of Frontier.com online customers buy up to a higher class; 50% of travelers buy up when they book through Frontier's call center, and only 5% buy up via the Travel Agent channel. The main issue is that travel agents (especially OTA's) are so focused on Low Fare Search that the higher classes are always at the bottom and the customer never sees them.

- This is fascinating to FMV since it means that Frontier actually invested money to redesign their Call Center interface so that 1) their agents can see all of the fares classes, and 2) the call center agents can now convey that information to the traveler. We’ve always thought that airlines, who have a ton of information about the passenger, could definitely increase revenues with just a little amount of extra data for their agents, and this is great confirmation. It may also mean that a call center agent w/ personality persents a better pitch than a static GUI.

- Priceless moment of the day – Sabre challanged Frontier if this means Frontier.com now had higher yields than the GDS channel. Jim Young answered with a clear “Yes”. The look of dejection from the GDS was pretty priceless.


Finally - it’s clear that there is a lot of angst around how airline shopping will be done in the near future with the expansion of bundled fares and attributes. How do you accurately compare a fare class with free bags vs. a fare class with priority seating and a window seat? We think the first site that can do that well with instantly gain massive share with full airline backing.

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