Inflight Ancillary: How airlines can monetize their inflight engagement platforms

As ancillary revenues are on the agenda of every airline, much has been written and said about the grand vision of airlines as omni-channel retailers, in which the in-flight part is just another touch point in an end-to-end, personalized, seamless, digital travel eco-system.

However, as airlines are only just embarking on this merchandizing journey, we take a look at the current state of inflight retail, which sees the opening up of a cabin environment that was previously ‘closed’ because of proprietary IFE platforms and the lack of Internet connectivity.

From In-Flight Entertainment to In-Flight Engagement platforms

Android-based in-seat IFE platforms, wireless IFE, Internet connectivity, plus the large number of passengers – and increasingly cabin crew as well – that carry a digital device, provides airlines with much more control how to move beyond providing just entertainment to new opportunities to generate ancillary revenues in-flight.

Jeff Standerski from Rockwell Collins summarizes this evolution nicely: “Passengers’ expectations have evolved from a passive ‘Please entertain me’ to a proactive ‘I want to entertain myself’. Our industry needs a new term to describe a holistic experience that is equal in every way to how people leverage their devices on terra firma. The future of the passenger/cabin interaction is beyond one of mere entertainment and can be more accurately described as one of deep and ongoing engagement: In-Flight Passenger Engagement.”

A similar vision is painted by Thales CFO Fred Schreiner: “We are going to go into a period where it’s about engagement. How do we move from an in-seat system, where an airline is looking at cost line, to an in-seat solution coupled with connectivity that moves to a revenue line?” Schreiner said families will be able to plan their holidays from the seatback: booking restaurants and exploring street level views of a city’s sights.

Eventually this means that this new ‘inflight engagement platform’ – be it seatback systems, inflight wireless portals or mobile apps – will become another touchpoint in the airline travel ecosystem.

Inflight Commerce

And with the proliferation of e-commerce, passengers have come to expect self-service and an on-demand environment up in the air. Besides allowing passengers to order food and beverages from their seat, this means that rather than making money from selling wi-fi connectivity, airlines should be turning to third-party merchants with last-minute inventory – such as hotels, restaurants, duty free retailers, transportation companies, sellers of event tickets – to develop a retail environment as part of their in-flight Internet portals.

Finnair ‘Nordic Sky’

Finnair, for example, has put its new ‘Nordic Sky’ inflight portal to work as a channel to offer new services to flyers, as well as boost ancillary sales. The portal can be accessed on passengers’ own devices and gives all passengers free access to, plus Finnair services such as destination information, customer care and pre-order duty free shopping— with items purchased being delivered to the passenger’s seat on their return flight.

Finnair ‘Nordic Sky’

Passengers can also use the inflight portal to order taxis via Cabforce on in-bound Helsinki flights, or book destination services such as trips, dinner cruises and concert tickets with Viator Destination Services. The airline is also considering to let passengers pre-order their groceries inflight.

Lufthansa x Frankfurt Airport ‘Inflight Shopping’

An early example of collaborative retail comes from Lufthansa and Frankfurt Airport. Passengers on in-bound long-haul Lufthansa flights can pre-order a selection of duty free from retailers at the airport via the Lufthansa inflight portal and have their orders delivered to them by the airport’s ‘runners’ at their arrival gate.

LEVEL ‘Pair & Pay’

With regard to the on-demand trend, IAG’s new long-haul low-cost carrier LEVEL is one of several long-haul LCCs such as Norwegian and Azul to allow passengers to order food, beverages and travel accessories via the in-seat IFE system and pay with their credit card via a solution called Pair & Pay.

LEVEL ‘Pair & Pay’

LoyaltyLobby describes the Pair & Pay system as follows: “After selecting the items on the screen, you got the choice to pair the screen purchase with your WiFi connected device and to pay using the card info stored on your profile. The buying experience is seamless and so easy. Those not willing to open an account could order their items and pay to a flight attendant using their card.”

Meanwhile in China

Meanwhile in China, airlines are more opportunistic in their efforts to monetize in-flight digital platforms. Air China has partnered with online retailer to offer passengers a selection of goods they can purchase via the in-seat IFE system for delivery to their homes, while Spring Airlines is working is working on an inflight portal that allows for online shopping on international flights.

China Eastern’s ‘In-flight Mall’ onboard it’s Boeing 777-300s enabless passengers to order meals, pay for upgrades onboard, and purchase duty free items through the seatback screen, passenger’s personal devices or tablets that are provided by the crew. The sidewall of one of the galleys also features a duty-free showcase, which displays a selection of the duty free items available for purchase onboard.

Reinventing onboard retail

As IFE systems are evolving into digital platforms, airlines have the opportunity to reinvent inflight service and retail. Or as trendwatcher James Woudhuyzen puts it in a straightforward way: “Sell things people actually want to buy, so when the flight attendant announces ‘Duty Free Goods’ it isn’t in a tone that shows she fully expects zero sales.”