четверг, 20 сентября 2012 г.

Can the plane stand the strain? - The Independent on Sunday (London, England)

Booking ski-hire, Broadway tickets or train tickets are just someof the new services being offered to customers up in the sky asairlines seek new ways to beat the downturn and make money.

Winter-sport operator TUI Ski is now offering passengers skihire, lift passes and reservations for aprs-ski events as they flyinto resorts - receiving a commission from every sale. AmericanAirlines, meanwhile, is testing on-board sales so that passengerscan buy tickets for Broadway shows as they cross the Atlantic, whilethose coming back to Britain can get their Heathrow-to-Paddingtonexpress tickets ready even before landing.

Finding new ways of selling more to passengers in the skies hassuddenly stepped up as the world' s airlines struggle to make moneyfrom flying. American Airlines is working with GuestLogix on its newticketing service, and both Ryanair and British Airways are signedup to use the same system. Japanese Airlines and All Nippon Airways,like easyJet, are also looking at imaginative new ways to improveservices, mainly by offering better food in the sky. JAL will soonoffer on-board vending machines selling alcoholic drinks tocustomers in the airline's revamped cabins, while, on ANA, economypassengers will be able to have business-class meals, as well as toorder drinks through their seat-back touch screens.

'The global on-board sales market could be worth up to $45bn ayear,' said Brett Proud, the vice president for sales at GuestLogix.'At American Airlines they are hoping to realise the potential of on-board advertising and product placement - nowhere else are customers'sealed in' for an average of three hours with nothing to do butshop.'

These latest moves to improve retail profitability in the aircome as the industry faces one of its worst years for decades. Butwill they make any real difference to revenues?

Giovanni Bisignani, the director general of the International AirTransport Association, is downbeat. 'The dimension of this crisis islarger and will be longer-lasting than the post-9/11 period. It willbe at least two or three years before revenues recover.'

EasyJet disappointed investors at its half-year results onWednesday, and Air France posted particularly bad results last weekwith a $147m (131m) loss for the second quarter, compared with a$27m profit for the same period a year earlier. In response to thedownturn, Air France management announced that it intends to cut1,700 jobs in 2010.

Japanese carrier JAL is desperately seeking a rescue package tooffset its $15bn debt as Tokyo indicated that it would not step into save the ailing airline from bankruptcy. Tyler Brle, the editor-in-chief of Monocle magazine, has warned that rival ANA will 'causeJAL to despair' as it revamps its services while JAL is forced toseek a bailout.

Industry losses for 2009 are expected to be in excess of $11bn,but some airlines are more willing than others to embrace a newapproach to on-board retail. Ryanair, the low-fares Irish carrier,has been at the forefront of in-flight retail and was the firstEuropean airline to sell tickets for onward travel on board itsflights. Now, 20 per cent of the airline's revenues come from thesale of optional extras.

'Ryanair has pushed the envelope as far as it can and haspioneered the growth in ancillary revenue,' said Wyn Ellis, analystat Numis Securities. 'I'm sure it'll try and get more out of carhire and hotels.'

EasyJet has pursued extra revenues, though less aggressively thanRyanair. But analysts expect that easyJet will further increase itsincome from extras such as Speedy Boarding and on-board sales,having recently improved its in-flight product line.

GuestLogix conducted a survey of 3,500 airline passengers whichshowed that many were keen to buy ground transfers on board to avoidqueues on arrival. In response, the Toronto-based company has signeddeals with every big airport in the world to offer tickets foronward transfers through the company's OnTouch system.

Despite the vast potential for airlines such as BA and VirginAtlantic to increase their revenue from onboard retail, analystswarn that the premium carriers should be wary of following the likesof Ryanair too closely. One analyst cautioned BA in particular; theairline is now charging passengers if they want to choose theirseats before flying, and also plans to charge for additional holdbags. He warned that aggressive on-board sales might push premiumcustomers towards the budget airlines. Wyn Ellis of Numis says thatwhile increasing its on-board product line might help with profits,BA risks playing into the hands of Ryanair as the two airlinesbecome less distinct but BA continues to charge more.

BA, like Virgin Atlantic, has been cautious in changing its on-board retail model, sticking to a traditional duty-free service. Aspokesman for the airline said: 'At BA we don't see on-board retailas bolstering our bottom line, but rather benefiting our customers.It is not something that we are dependent on, rather it's anadditional service that we offer.' The airline acknowledges that itearns a 'modest profit' from its duty-free shop and recently madeits Highlife shop available online to sell to passengers after theirflights have touched down. BA recently introduced in-flight mobile-phone services on all its business routes from London City airportto New York, from which it earns a commission. However, there are noplans for a roll-out on all services because of the cost involved.

EasyJet recently overhauled its onboard retail system to help itto track its on-board sales and target products more accurately. Aspokesman for the airline said: 'In the past we tried to sell Germanbeer to French passengers and vice versa, which didn't really work,so now we're looking to stock our aircraft locally with moreconsideration of what each market will want.'

As easyJet has grown, it has taken account of its passengers'requirements by, for example, stocking kosher food on its Tel Avivroute as well as planning to introduce halal food on its Turkish andNorth African routes.

In its full-year results last week, when the Luton-based carrierannounced a 50 per cent slump in profits, management indicated thatit wanted food and drink to become a 'more important' part of thebusiness. In addition to catering, the airline has started sellingdiscounted Oyster cards - Transport for London's pre-paid passes -and rail tickets on its London routes. EasyJet receives a commissionon sales, and, according to the airline, the new products have beensuch a success that the airline is now looking to introduce similartravel products on flights to other destinations.

Some airlines remain above such tactics. Virgin Atlantic, likeBA, has been reluctant to put the hard sell on its passengers,choosing instead to focus efforts on keeping costs down elsewhere inthe business to allow staff to concentrate on on-board service. Aspokesman for the airline said: 'The staff focuses on providingservice with a smile. Our competitors have an expensive coststructure with many aircraft, whereas we only have 37 aircraft.There is a small take from our on-board duty-free but it'sprofitable.' The airline introduced a line of in-flight laptopchargers in October for use in Upper Class cabins, which have, itsays, been a success.

However, Gert Zonneveld, a Panmure Gordon analyst, says: 'Theyare missing an opportunity and they could cash in on the untappedmarket, which would make sense as long as they didn't bombard theirpassengers. It depends on whether the unions and whether staffcontracts allow for sales in the same way as Ryanair's contracts do.Also, it's complicated by the fact that Virgin offers food for free,and so would have to choose products for which demand would behighest.'

But it is Ryanair that has led European airlines in adopting on-board retail as a big part of its business strategy. Today theairline receives 20 per cent of revenues from optional extras,including on-board retail, with passengers spending 9 ($15) onaverage. The Irish carrier was the first in Europe to sell ticketsfor onward travel and has introduced a number of exclusive products,including scratch cards and smoke-free cigarettes. A spokesman forthe airline says: 'All of the products available on board comethrough third-party suppliers and we're open to all propositions. Werespond to customer demand. A Ryanair poll showed that manycustomers wanted to be allowed to smoke on board. So we found asupplier and we have been selling smokeless electronic cigarettesfor four months now and they have been very successful.'

Ryanair offers its customers car hire and hotel bookings on itswebsite, though there are not yet any plans to offer these serviceson board its aircraft. Analysts expect that the airline will try to'get more out of car hire and hotels' in the near future, thoughthey also acknowledge that Ryanair has probably pushed on-boardretail as far as it can.