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AirlinesBlog

Peter Marshall (PM): Vimal, welcome back to TRunblocked.com Let’s start with a fairly direct question: do you think that inflight retail will worsen after flights get back to a degree of normalcy this summer?

Vimal Kumar Rai (VKR): Well, Peter, that depends a little bit on what you mean by “worsen”, and for whom?

Let me begin to answer this differently. Let’s consider: what would be an amazing inflight retail experience for passengers and therefore, by extension, for the airlines offering it? Passengers will only buy when they are ready and willing to consume the value offered. Whether it’s food, drink or some other product or service, if it’s unknown, irrelevant or unworthy, very little –  if any – retailing will take place.

So, by contrast, an amazing inflight retail experience would be, for example: delicious food items, often branded, packaged interestingly,  standard but solid coffee on morning and afternoon flights, price-reduced impulse products available on-demand, or luxury products and services tailored or personalised to you –  one that genuinely makes you feel special as if you’re the centre of attention.  Ask any consumer and some version of all of these things would be their definition of an amazing retail experience.

It’s just like a tourist who goes to a mall in the US and you get a discount booklet, plus stickers behind the changing room doors with further stackable discount codes. Or in Las Vegas, where  the entire experience is so overwhelmingly immersive and wonderful that I can’t even remember how much I paid for the room or the dinner! Or even  like going to Hermes or LV in Paris and being served a glass of champagne while you decide on your purchase.

Retail needs to be an experience that is not only painless, but actually joyful. Think back to all the amazing retail experiences you’ve had, and it’s likely that  the common thing is not the price. It’s more about experience, the sense of place, being made to feel special as well as having the feeling of having snagged a deal.

So –  and I know this answer is a bit overlength –  if based on all this, you ask me if Inflight Retail is going to be “worse”, I can tell you it will simply be more of the same. Some airlines are starting to look at the technology, processes and marketing around inflight retail, but it really isn’t changing fast enough.

PM: We don’t need to go over the oft-quoted problems with inflight retail or catering. To me the root of the problem still appears to be fundamentally a cultural and mindset issue. There is simply a patent lack of engagement after the ticket sale. Of course there are some airline exceptions, but where do you think some concrete and affordable steps can be taken to course correct?

VKR: Absolutely right, Peter. In fact we know from our common Travel Retail roots about how airports wax lyrical about the golden hour for retail (after checkin and before boarding). Airlines have days, sometimes weeks or months! That there is zero attempt at any savvy engagement, is truly astounding.

PM: What are the other areas where you would say the airlines are losing out here?

VKR: Loyalty marketing is another baffling blind spot. Why in the world airlines with highly engaged loyalty members would not market the hell out of them (especially when they know they’re travelling) is simply beyond me.

And inflight is the other huge opportunity that is just overlooked by most, if not all airlines. Full-service airlines have a duty free offering that is passive at best, and requires an interested shopper to expend an extraordinary amount of effort to make a purchase.

Our browsing, retail and consumption habits have gone digital and we are slaves to the convenience of it all. If you tell me that I now have to pick up a heavy magazine, leaf through it, reach up to the call button, speak to the crew, have them go fetch the item for me to inspect, then if I’m buying for me to fish around for my wallet and credit card, wait for them to get the payment devices, etc etc etc. Just forget it!

PM: So, again, it begs the question: what, concretely, what can airlines do, and do with minimal investment?

VKR: I think there are four key things here. As a starting point, airlines need to stop thinking about the ticket as the “sale”. They need to look at the ticket as the gateway to all other retail and service opportunities. Apply best revenue management principles to your onboard retail practices, too.

Then,  with loyalty data for example, there exists detailed information that can be “weaponised” for retail purposes in so many different ways. Offering loyalty members the ability to pay with miles is a simple example.

Next, even without loyalty data, there exist numerous trip and non-trip related opportunities to market to a passenger in a way that is not spammy – especially once a booking has been made. Offering a pre-order discount is a blunt but effective tool, or a referral discount for example. This isn’t rocket science.

Finally, I would urge airlines and onboard retailers to “Flip the Script’’.. Stop peddling product half-heartedly. If you use all of the previous 3 tactics AND pair that with an onboard in-seat ordering solution (like we have at AirFi), that empowers and inspires passengers to browse, select, pay and buy products using their own personal devices. This way you are essentially bringing the most convenient aspects of e-commerce into the sky. It “flips the script” because you don’t require crew to push products anymore and instead passengers can “pull” on demand.

PM: So what do each of these elements of customer engagement help to deliver?

VKR:  Basically they help to do 2 things. First, it broadens/expands the retail window-of-opportunity from inflight to pre- and post-flight. And second, it transforms and elevates the “inflight” portion of the journey into a more meaningful one for the passenger. And by ‘’meaningful’’ I simply mean that it becomes part of a wonderful ‘’experience’’ rather than simply a ‘’transaction’’. Remember the idea of going to a mall to spend the day in retail therapy? Well, that’s exactly what AirFi is doing – bringing to life a true ‘’Mall in the Sky’’ for airlines with our ecosystem of applications and service providers”

PM: Staying with maximising ancillary revenues, where do you see real growth coming from – a broader pre-order offer coupled with a finessed onboard range? We have seen some good airline examples via Omnevo and their airline partners. How does AirFi differentiate itself as a business?

VKR:  Good question. Pre-orders from a broader range is certainly a good thing, but our focus in AirFi is to maximise the opportunities available inflight.

This has traditionally been almost a “dead zone” when it comes to revenue generation, so installing a platform that engages passengers via their personal devices – which is what everybody prefers to do anyway! – seems like a logical opportunity to tap into.

Not only can this platform open up a world of digital opportunity in an otherwise offline environment, but it becomes a bridge between the pre- and post-flight customer monetisation opportunities for airlines.

AirFi’s unique value proposition stems from our specialisation as technology, operations and retail experts. We are quick and inexpensive to deploy (weeks, not months with a clear ROI). We have a “Mall-in-Sky” approach to the inflight and onboard proposition for passengers, and we have a roadmap to full connectivity with our Low Earth Orbit (LEO) solution that will be live on a few airlines shortly –  if this is what airlines are eventually hungry for.

This is why we have had over 70 airlines and railway operators in the last 11 years trust in us for their passenger engagement solutions.

PM: Developing this, it seems to me that some airlines like Emirates, Singapore Airlines, Virgin Atlantic, and Qatar Airways  are moving in the right direction. Would you agree?

VKR: In general, yes I’d agree these airlines are some of the savviest inflight retailers in the business today, and yet I can’t help but also feel they are limited by their “full-service” moniker.

They cannot, for example, easily make the transition to retailing anything beyond duty free on board their international flights, without risking the ire of customers. And so for them, ancillary revenues are very much a product of on-ground, in-booking path retail of things like baggage, insurance, holidays etc., while the inflight domain remains largely the same as it was back in 2019 and before. In fact, in some cases it’s worse than before in terms of product and brand selections.

PM: So, is there a solution around these branding and business-model imposed constraints?

VKR:  Yes, I believe there is. I would start by saying implement a 2nd screen strategy off the embedded IFE screens. As I’ve said before, we all love our personal devices, particularly our phones and tablets/iPads. If the IFE screen in front of my face was limited to videos and other low-touch content (like the map), then the high-touch and therefore conversion-oriented content such as retail, gaming, destination exploration etc. – could instead be streamed onto personal devices.

You know the joke, Peter? Airlines are already actively facilitating this 2nd screen model and no one realises it or even talks about it! All the airlines you mention offer free and paid internet connectivity, and passengers are already using their personal devices to do this. In other words, passengers have already come to expect and in many cases adopted this 2nd screen behaviour, so why not capitalise on it further?

They would actually have the best of both worlds and would steal a march on their LCC competitors!

PM: Moving on, do you think that there should be greater collaboration between airlines and land-based retailers, even airports to help build ancillary revenues? Where might there be opportunities for co-operation that makes commercial sense?

VKR: In a word: yes! Every retailer needs customers and airlines have them in droves. It makes complete sense to collaborate. Especially between airlines and airports.  I would say the potential is highest here, actually much more than between brands/retailers and airlines.

Why? Because in the minds of travellers they are already “on holiday” by the time they are on their way to the airport and in their minds, airlines + airports are all part of one integrated ecosystem.

So to put it simply: an integrated value proposition for travellers would involve simple but highly-prized services such as airlines retailing 3rd party lounge access, co-marketing of airport and inflight shopping, pick-up and delivery from airport of origin, destination or airline in-flight, food pick-up and delivery to gate, etc etc. Some of these things are already being done, but the fact is they are done in silos and largely startup-led.

The point to note here is that the context is different. That is, just because I’m flying on Airline X, it doesn’t automatically mean I’m looking to buy perfume, or a carton of cigarettes, or that I’m open to you advertising your luxury villa in Bali to me.

However, we have all become quite comfortable and accepting of the idea of “value exchange”. It’s why we willingly share our emails and sometimes even personal data in exchange for internet access, or to download free templates off the internet, or in exchange for special deals.

So there’s  literally a ton of possible value-exchange ideas that can be trialled by airlines, airports, retailers and brands, in a “quaternity”. And this does not have to be limited to the traditional Travel Retailers brands and retailers, either. Bring in downtown retailers, include insurance providers, or theme park operators etc. The possibilities are numerous, with everyone – most of all the passenger – gaining something valuable in the process!

PM: Final question, Vimal. If there were 5 areas that you would recommend for action by airlines, what would they be? 

VKR: First, break everything. Observe, measure, question and diagnose everything that goes into your current inflight/onboard retailing business. From procurement to loading, from pricing to promotions, from crew motivation to financial reconciliation. Everything.

Second, redefine what good “inflight” retailing would look like. Dream it up, then draw it up. Take inspiration from the world’s best supply chain companies, retailers, marketers and experience designers. Everyone.

Third would be: own your platform. Understand that you can outsource many things, but your platform should not be one of them. Last mile provisioning – ok. Food production – ok. Products and services – ok. Tech development – ok. But own the platform so that, over time, you control and own the service provision.

Fourth:  communicate to your customers. Incessantly. Be social on media. Invest in communicating the dream. Invest in delivering on the dream. Talk about failures, talk about success. Ask. Listen.

Finally: Try, Test, Fail/Succeed, Evaluate, Adjust. Rinse & repeat. If you do #1-4, then you will have the ability to test and try new things and evaluate on your own terms. You won’t have to do the same thing over and over, while expecting different results.

Rinse and repeat. That simple. And it’s actually doable.

 

Peter Marshall

Founder: trunblocked.com/Marshall Arts

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