easyJet to shake up the package holiday market

Hot on the heals of mergers between Thomas Cook and My Travel, and TUI and First Choice, and the news that 1,000s of Summer 2007 package holidays remain unsold, easyJet is planning a further shake-up of the industry with the launch of easyJet holidays. This follows on from Jet2.com, who launched Jet2 Holidays back in February.

easyJet's concept is to marry the flexibility of a do-it-yourself holiday with the peace of mind from booking with a traditional tour operator. So, holiday makers select from any easyJet flight, choose from a range of accommodation, and decide how long they want to stay ... and the whole holiday is protected against cancellation or disruption by the Travel Trust Association.

This puts easyJet in competition not just with the traditional package holiday companies, but also with on-line travel agents like lastminute.com, Opodo and Expedia. And, this is a further blurring of the lines in the travel industry: where we have tour operators turning their charter airlines into low cost airlines (e.g. ThomsonFly, Monarch), and now low cost airlines offering package holidays.

Interesting times.

Effective marketing to "people about to take a flight"

Anyone interested in advertising to airline passengers on their day of travel should take a look at an article published last year by Ogilvy UK Vice Chairman Rory Sutherland, where he argues that targeting an audience purely based on demographics creates less than sparkling results.

Interestingly, Mr. Sutherland partly attributes the success of low cost carriers to "the way they have managed to defy demographics, being neither down-, mid- nor upmarket, and hence being able to sell to, well, everyone."

And, he believes that the digital media age opens up opportunities to "speak to an audience that is cut, diced and prepared any way we want them - by individual, by mood, by mode, by moment, by interest, by passion - even by demographic, should we wish."

As one example of this new way of selecting an audience, Mr. Sutherland mentions"people about to take a flight". And, this is what StreamThru is tapping into: the ability to engage passengers in a dialogue pre-departure, to provide information, and a strictly controlled number of highly relevant advertising messages.

With StreamThru, advertisers can choose which passengers they wish to engage with, based on a person's profile, journey plans, current status, past behaviour, and preferences.

Find out about a more effective way of investing your airport advertising budget.

How can airlines increase per passenger profit by one third?

The International Air Transport Association (IATA) project that airlines will generate combined profits of US$5 billion (€3.7 billion) in 2007.

However, set against global revenues of US$470 billion (€349 billion), IATA Director General and CEO, Giovanni Bisignani, rather aptly commented: "A profit of US$5 billion (€3.7) billion is peanuts."

And, when you consider Airports Council International (ACI) latest figures show 4.2 billion passenger movements for the year ending March 2007, then airlines are making around US$1.19 (€0.88) profit for every passenger flown.

One way to improve profitability is to follow the lead of European low cost airlines such as Ryanair, easyJet, Air Berlin, and Sky Europe, who have all created effective ancillary revenue streams.

A day of travel passenger dialogue could be worth €0.30 (US$0.40) per passenger
Taking this a stage further ... engaging in a permitted dialogue with passengers via their mobile phones creates a day of travel distribution channel for ancillary services . Passengers are happy to opt-in because they are kept informed of their flight status, and in return they agree to receive a small number of relevant offers from the airline, its affiliates and airport retailers.

Based on a conservative assumption that a third of passengers opt-in: if an airline promotes one of its own services (e.g. upgrades, priority boarding) or one of its affiliates services, and it allows airport retailers to send 1 or 2 targeted offers per passenger, then it can generate an extra €0.30 (US$0.40) per passenger profit.

Or, put another way ... for very little effort airlines can increase profitability by a third.

Find out how to create a permitted, day of travel passenger dialogue

How can airport retailers reverse declining passenger spend by raising awareness on departure day?

Sending targeted, mobile vouchers to opted-in airline passengers on departure day can deliver exceptional redemption rates ... and a massive boost to your sales revenue.

How can airport retailers reverse declining passenger spend?
With beauty and cosmetic products accounting for a third of all airport retail revenues, and spend per passenger in Europe remaining flat or declining in real terms over the past 5 years, how can you increase your share of the customer purse when your product is in a different category?

The key is to raise passenger awareness of your offer on their day of travel ... ideally communicating your message once they have passed through security and are in a relaxed, receptive, and impulsive frame of mind.

How do airport retailers build passenger awareness on departure day?
Other than in airport advertising (e.g. billboards, posters, etc) which relies on the passenger walking past and paying attention to the ad, there are several ways of raising awareness of an airport store and its special offers:

Place paper discount coupons in travel related magazines
Offering discount coupons through magazines is one option. However, the customer has to cut the coupon out and remember to bring it with them to the airport (along with all the other things they have to remember e.g. luggage, tickets, passport, keys, mobile phone, etc). So, it's unlikely to be high on their priority list.

And, paper coupons are wasteful, because the majority of the readers won't be travelling during the time your advertising campaign is active, and of those who are only a certain percentage will fit your target demographic.

And, perish the thought that you get the campaign wrong ... and you have countless, uncontrollable coupons floating around for weeks or even months.

Handout paper vouchers at the airport
A more relevant and more timely approach is to hand out paper vouchers at the airport. This is a more targeted, but again not everyone receiving a voucher is a potential customer. So, there is still lots of waste, and the potential to annoy passengers by handing them irrelevant material.

And, you are still dealing with paper vouchers, which are a real hassle to manage and reconcile.

Send targeted, mobile vouchers to opted-in passengers
The third way is the StreamThru way. We'll let you access large numbers of opted-in airline passengers on their day of travel. Passengers sign-up for free flight information to keep them informed about their flight status and they agree to receive a limited number of relevant adverts.

As a retailer, you can target passengers based on who they're flying with, where they're flying to, when they're flying, why they're flying, etc ... this enables you to focus your offer on your target audience, which means minimal waste, excellent redemption rates, and increased sales revenues.

Mobile vouchers offer the ultimate in campaign flexibility: you get near instant feedback on redemptions, allowing you to dynamically optimise your offers in real-time.

And, with StreamThru, we don't require any integration with your point-of-sale (POS) ... so you can get started straight away.

Find out more how StreamThru can help grow your retail sales revenue

Surviving the low cost airline price war

The low cost airline price war is really hotting up. Ryanair announced on the 19th June that it is releasing 3 million summer seats for £10, and easyJet announced it is extending its summer sale and lowest price guarantee until 27th June.

Some in the industry, including Spanish low cost airline Clickair, are predicting the fall out from this price war will see smaller operators get squeezed out.

"There are more seats than passengers for 2008/09 and some [low cost carriers] won't make it. Perhaps some will become charter operators or there may be consolidation" - Alex Cruz, CEO, Clickair

For all low cost carriers, the key to surviving the price war and maintaining profitability is to maximise ancillary revenue. Most low cost airlines have optimised sales of ancillary services (e.g. car-hire, hotels, insurance) through their website, pre-travel.

With more and more carriers encouraging passengers to check-in at home, valuable day of travel touch-points to sell last minute upgrades are disappearing ... so the challenge now is to create a new, low-cost, day of travel ancillary revenue stream.

Find out how StreamThru can help you reconnect with passengers on their day of travel to deliver enhanced service levels and boost ancillary revenue.

88% of UK shoppers are interested in relevant retail offers

A recent UK survey by personalised marketing and payment solutions specialist Pay By Touch revealed that 88% of shoppers would use discount coupons, if they were more both highly targeted and more convenient to use. This reinforces findings from our own survey, where we discovered that 2 out of 3 air passengers are happy to receive relevant offers from airport retailers.

When it comes to personalised, targeted marketing , retailers and consumers interests are aligned. They both want relevant and convenient offers:

Relevant Offers
Retailers want to maximise the return on their marketing spend, which means achieving high redemption rates ... and targeted offers produce the best redemption rates because they're most relevant to shoppers.

Consumers want a good deal, but since they are bombarded with marketing messages most advertising passes them by … however, the messages most likely to attract attention are those that are timely and relevant to their needs.

Convenient Offers
Pay By Touch's research also showed that shoppers don't like to carry paper vouchers around and this contributes to low redemption rates.

Retailers find managing paper vouchers to be a time-consuming pain, even more so for those retailers who operate in the secure airside environment.

Communicating with passengers on their day of travel
With StreamThru we've tried to address both of these issues.

We understand enough about the passengers who opt-in to our service to enable retailers to target their offers based on a passenger's profile (e.g. where are they flying to, who are they flying with, are they travelling on a low cost carrier, is this a business or leisure flight, what is this passengers geo-demographic profile?).

And, we've eliminated the paper voucher. All our offers are sent to the passengers mobile phone for rapid, paper-free redemption. For retailers, this creates the flexibility to change offers for particular passenger profiles at different times of the day, or on different days of the week.

We feel this provides a basis for retailers to have a valuable, permission based dialogue with passengers on their day of travel.

Poor travel information causes Kennedy to miss flight and conference speech

Read a great story on TravelMole ... apparently, Charles Kennedy, the British MP and former leader of the Liberal Democrats, was a notable absentee from the ITT conference in Gran Canaria after missing his flight.

Mr. Kennedy had been booked to speak at the event, but due to a mix-up in his travel plans he arrived at London Heathrow Airport, when his flight was departing from Gatwick.

An easy mistake for a busy person to make ... but, nonetheless completely avoidable. Had Mr. Kennedy registered his flight with StreamThru, then 4 hours before his scheduled departure time we would have sent him a flight status update direct to his mobile phone ... reminding him amongst other things which airport and terminal his flight was departing from.

And, StreamThru is free to use, so it wouldn't have cost him a penny.

Oh well, there's always next time!

Our US$27 billion duty free habit

We certainly like our duty free. According to the experts at Generation Group, in 2005 we spent an eye-watering US$27 billion on duty free and travel retail goods, with most of this money being spent in airport shops.

Over 40% of these purchases were made in Europe, with the UK being the largest market. In fact BAA's World Duty Free stores at London Heathrow Airport took over US$800 million alone, accounting for nearly 3% of the global market.

So what are we spending all this money on?

Well, not on the traditional booze and tobacco ... it appears we're getting more sophisticated, snapping up perfumes and cosmetics and developing a taste for chocolates and fine foods ... with these products accounting for over a third of spending.

Wines and spirits showed modest growth, but tobacco is in serious decline and now accounts for only 10% of the market, compared to 25 years ago when it represented nearly a quarter of all sales.

So, our habits are changing, but it seems we still enjoy visiting the airport shops, a fact backed up by our own survey where over 62% of 2,887 people questioned expressed an interest in receiving offers from airport retailers. This was one of the reasons why we created StreamThru ... to allow retailers to share targeted, relevant offers with interested passengers.

Airport security stresses out 66% of business travellers

We've noticed a recent trend for surveys showing how business travel has become more stressful over the past 12 months. TravelMole reports the latest findings from a survey undertaken by SAS, showing that 80% of respondents find travelling more stressful than a year ago.

The biggest headache for these business travellers is airport security procedures ... with unpredictable queue lengths and procedural inconsistencies getting the goat of 66% of those surveyed.

SAS' solution is to introduce fast track security lanes in Stockholm and Copenhagen.

However, as fast track becomes more common and open to larger numbers of passengers, where will resources come from to manage these priority lanes? And, what about those passengers who aren't fast-tracked?

We agree that queueing is enormously frustrating, but we also think this frustration is made worse because you don't know what to expect as you travel to the airport.

So, as we continue to build closer ties with airport operators, one of the things we'd like to so with StreamThru is send our members advance warning of the security queue length. This won't reduce the time you wait ... but knowing what to expect is half the battle and allows you to plan around the queues.

1 in 20 have missed business meeting due to flight delays

Our recent survey of UK air travellers showed that 1 in 20 people have missed a crucial business meeting due to flight delays.

Of those who experienced a delay, 15% missed a pitch for new business, one in twenty missed a meeting with their boss and 5% revealed that they had to wait overnight in an airport for their flights to be re-scheduled.

With departures from UK airports having rocketed to 180 million, and one in four of all air passengers facing delays is it any wonder that the prospect of flying stresses out so many business travellers?

Respite for transfer passengers carrying liquids?

Airport security regulations have been a nightmare recently, particularly for transfer passengers starting their journey outside the EU, EEA, or Switzerland. Any such passenger transferring via an EU, EEA or Swiss airport will have all liquid products over 100ml confiscated at security.

As a result, passengers are confused over where they can legitimately purchase duty free alcohol and perfumes.

The European Travel Retail Council recently highlighted the scale of this problem stating that Frankfurt Airport confiscates over 2,500 litres of harmless liquids a day and Zurich Airport estimates that it confiscates €22,000 of alcohol and perfume products each day.

However, a potential breakthrough occurred at the end of May, when the EU Aviation Security Committee informally agreed to allow passengers originating from selected "secure" countries outside the EU, EEA and Switzerland to continue their journey without surrendering their liquid products.

However, before we all get too excited this has to be formally ratified by the European Commission and it will be several months before the first secure countries are approved.