What if selling airline tickets was no longer the sole business of airlines? More and more of them are getting into e-commerce to sell them something other than their own products. More and more airlines, such as Singapore Airlines, are moving in this direction.
A transformation driven by the crisis and the need to strengthen customer relations
The crisis has taken a heavy toll on airlines which, even though some have received substantial government support, have had to think about multiplying their sources of revenue.
Some have done so using old tricks, such as Lufthansa and Swiss, who are switching to a model of paid catering in economy class on short and medium-haul routes, but others have been more inventive.
I won’t go into the very specific case of American airlines, which sometimes make more money from their frequent flyer programs than they do from flying airplanes, but I’ll concentrate on those that are exploring genuinely new business models, and in particular the creation of genuine e-commerce platforms.
Why e-commerce? Because airlines can legitimately sell a number of things related to the traveler experience without actually flying, and because they have a vested interest in keeping their customers in their ecosystem for as long as possible.
What do you buy from an airline? Flights, ancillary services such as upgrades, meals on board, extra baggage allowance, sometimes hotel nights and car rentals, but not much more. In the meantime, you’re no longer part of the airline’s ecosystem.
By offering an e-commerce platform that is legitimate in the eyes of the customer, the airlines keep them “at home” longer, and multiply the opportunities for contact. Buying a ticket can be an opportunity to buy a suitcase, but buying a lifestyle product can also be an opportunity to be offered a ticket or a destination.
And in a much simpler way, like Uber, which offers a growing number of services under its own brand, they could offer a range of on-demand services accessible from a single portal, useful to both the traveler and the customer when at home.
Customer experience …but not only
As is often the case, these transformations will be carried out in the name of customer experience, but the truth is more mercantile.
I understand that making it easier to buy things that are radically different, but part of the travel experience, simplifies life for the customer, who can find everything he wants (or doesn’t want) in the same place. But let’s face it, this makes it easier for airlines to push customers to buy things they had no intention of buying in the first place.
We’re also in the data age. The more points of contact and interaction you have with your customers, the better you know them., the more you know about their consumption habits, the more…you’re able to make them personalized offers, a pompous expression for suggesting products or destinations that are consistent with their recent purchases.
From by-product to travel experience
E-commerce is nothing new for airlines. Many of them, like Air France, have an online store to sell their merchandise.
For others, e-commerce was also intended to replace duty free, with a broader offer than by-products. The major US airlines have stopped on-board sales, as have some European airlines such as KLM. The reason: not competitive enough to face up to competition from airports and unnecessary weight at a time when we’re fighting CO2 emissions.
The Dutch airline said it was considering alternative offers which, to our knowledge, have not yet seen the light of day, projects having undoubtedly been halted by COVID. But one of the alternatives was, of course, e-commerce.
Let’s finish by adding that during the crisis, some airlines even went so far as to sell their meals online!
But things are now getting serious with real industrial e-commerce projects?
Singapore Airlines launches Pelago
Singapore Airlines launched Pelago, its e-commerce subsidiary, last June.
It sells non-airline “experiences” for customers passing through Singapore. These range from the discovery of unusual places to experiences in restaurants or bars (not just a reservation but a special happening) or “staycation” for locals.
The promise is to bring the Singapore Airlines customer experience from the sky to the ground…which may sound a little pompous if you consider that Singapore Airlines is one of the two or three most premium airlines in the world, which is not the case with the consumer experiences on offer.
AirAsia becomes a “digital Lifestyle” business thanks to a Super App
Even more ambitious is AirAsia’s desire to become a “digital lifestyle” business, offering in its application everything a customer could want. Flights, airport transfers, food and beverage deliveries. In fact, Air Asia no longer calls it an App, but a Super App!
A symbol of this commitment is the acquisition of Thailand’s Gojek, a marketplace that brings together drivers and merchants who sell their services and products via their e-commerce platform.
But Gojek is even more than that: it’s also payment services, online advertising management, restaurant management, a streaming media platform, online ticket booking…
With this acquisition, AirAsia’s Lifestyle platform is already valued at $1 billion.
Lifestyle repositioning for the Cathay brand
Several weeks ago, Cathay Pacific announced a brand evolution towards a more “lifestyle” concept, with the name “Cathay” and a new slogan “Life Elevated”. Cathay Pacific is now just the name of the airline, which in turn is just one part of a broader offering and experience.
The actual translation will take place over time, mainly in 2022, but behind a concept that may seem a little nebulous we can read:
“At the same time, ‘Cathay’ makes our proposition more attractive. By integrating our offerings and through better partnerships, we will bring a wider range of products and services for the benefit of our customers.”
And unsurprisingly, part of the promise is about shopping…
So when the airline tells us that:
“Cathay brings Cathay Pacific, Marco Polo Club and Asia Miles together in one place, simplifying the way our customers interact with us, including how they earn status and use miles.”
We can expect a lot of movement on this side of the market in the future:
Bottom line
Airlines have decided to embrace e-commerce in order to depend less and less on their “air” revenues.
This means a more lifestyle repositioning of their brand, which may not be easy for everyone.
This is just the beginning, but while American airlines are valued at less than their frequent flyer programs, one wonders if one day e-commerce won’t be a major source of revenue for some airlines, and their current core business a business line like any other…
Once again, one wonders whether European and American airlines are letting the train pass them by…
Photo : ecommerce by RossiAgung via Shutterstock
