It’s not just a seat!

February 11, 2014

A view from Datalex’s commercial director in Latin America.

IATA recently advised that ancillary revenues are a key driver of improved financial performance and that worldwide ancillary revenues have risen to an estimated $13 per passenger. They continue to add that without ancillaries, the industry would be making a loss from its core seat and cargo products.

Seats have been and still are one of the most relevant drivers behind that revenue opportunity, especially in the US and European markets where seat fees are at a relatively mature stage of development. In those markets airlines know, for example, that some customers are willing to pay to reserve seats ahead of flight check-in or to sit together. Therefore they are starting to introduce a variable pricing model which, with the right technology, will enable the airline to price seat assignments based on demand.

Legacy airlines in the LatAm region, unlike their counterparts, are starting to discover this untapped revenue. We can see some airlines starting to charge to select a seat for its proximity to the front of the aircraft especially. Some, but decidedly not many, for an aisle or window seat; and even fewer for extra legroom or amenities like in-seat power.

In any case, the particularities to exploit this revenue according to market, equipment, profile of customer and so on are not minor. Therefore a common approach or ‘one solution fits all’ do not seem to be the most appropriate way to optimize this opportunity. As airlines become expert retailers, they will need more than ever to merchandize their products and show value across direct and indirect channels. They will need to personalize their distribution to avoid being seen by customers as substitutable commodities.

 Alejandro Ormeno
Commercial Director Latin America, Datalex