How can airlines make money from mobile services (Part II)?

In part 1 of this article I identified 3 factors curbing the roll out of mobile services by airlines:

• Headline passenger numbers are misleading


• Mobile service providers offer limited content


• Premium rate mobile services offer appalling margins

In this post, I propose a model that overcomes these issues and creates a platform for a profitable relationship between mobile service providers and airlines:

• Source mobile content from multiple suppliers


• Decide which passengers get offered which services


• Take payment up-front

Source mobile content from multiple suppliers

There is plenty of mobile content on the market today that is relevant to airline passengers. For example: flight information, weather forecasts, ski forecasts, traffic updates, destination guides and quizzes.

However, many of the organisations who provide this information focus on a single business area. So, some companies provide an excellent traffic update service and others provide a great weather service; but, few provide both services.

For airlines to make money from mobile they need to offer multiple services to their passengers. So, they either need to source content from multiple providers or they need to outsource content aggregation to a third party.

Decide which passengers get offered which services

However, sourcing great content is only part of the answer. Airlines next need to decide which passengers get which services. The best way to do this is by analysing the airline's booking data.

For example, to identify passenger types:

• You might classify skiers as passengers travelling with sports equipment to airports near ski resorts.


• In a similar way, you might classify golfers as passengers with sports equipment travelling to Spain and Portugal.


• And, in the summer months, you might classify a family travelling for their summer holiday by looking at their destination, party size, and duration of visit.

Some services (e.g. a ski forecast) are only relevant to a certain type of passenger. Other services (e.g. a weather forecast) apply to multiple passenger types. To increase subscription rates, you can promote services in a different way to each group. For example: golfers and family holiday makers may both be interested in a weather forecast, but to increase the relevance of the service to each group you would promote it in a different way.

Taking payment up-front by credit card offers much higher margins than premium rate SMS and lets you reassure passengers they won't receive any nasty, unexpected mobile charges.

The downside of this approach is that some people may be reluctant to pay with credit card for a relatively low value transaction. So, the question is: should you bundle a number of mobile services to create a product with a higher price-point? This is an area we are currently exploring with our own services.

How to implement this

In an earlier article I provided some guidelines for airlines who want to set-up a mobile travel concierge service. My recommendations for launching mobile services are:

• Test the concept outside your booking process - so you can execute quickly and keep costs low


• Invite passengers through your confirmation email - utilise an existing touch-point


• Direct passengers to a web micro-site to opt-in and pay for the service - for speed this is separate to your main web-site but uses the same branding.