Issues & Trends – June 2011
How airlines are planning to grab revenue from the ‘mobile wallet’
AN Amadeus-commissioned report, released earlier this month, has detailed how mobile technology is set to transform airline operations and the traveller experience.
A key development is likely to be accelerating growth of mobile purchases of “ancillary services” direct from airlines – an area where revenue is growing rapidly as carriers increasingly pare back their offerings to a basic fare supplemented by extra payments for baggage, meals, on-board entertainment and similar services.
Airlines have claimed difficulties in selling these ancillary services through GDSs but some informed commentators have depicted that as a “smokescreen” to hide their reluctance to share this revenue with travel agents.
The report, The always-connected traveller: How mobile will transform the future of air travel does not directly address this issue but it leaves no doubt that travellers are already beginning to “expect, demand and adopt” mobile services.
It reveals that 16 per cent of travellers surveyed currently use smartphones to book trips. That figure rises to 18 per cent among the 18-35 age group and to 33 per cent among frequent travellers.
In addition, 3.4 per cent of all travellers use their mobiles today to check-in for their flight, with this figure rising to 7.4 per cent in Asia.
Authored by Norm Rose of Travel Tech Consulting Inc, The always-connected traveller report distils the
findings of qualitative research among
nine airlines around the globe and primary data gathered from a global study of almost 3000 travellers conducted by JD Power on behalf of Amadeus.
It assesses airline mobile capabilities today, identifies emerging innovations that are likely to be launched over the next one to two years, and points to advanced functionality “that is set to change the traveller journey as we know it, over the next three to five years”.
Most carriers indicated that basic mobile functionality such as schedules, check-in and disruption management are part of their existing offer.
At this stage only 1.4 per cent of travellers have used mobile devices to purchase ancillary services and most airlines feel the ability to sell ancillary services through the mobile channel is “more than a year away”, the report states.
But The always-connected traveller reports: “Scandinavian and Middle East based airlines outlined plans to aggressively increase their mobile ancillary offering within the next six months.
“Premium seating, the option to pre-purchase meals and club access are among those services due to be made available via mobiles in the coming months.”
And all of the airlines surveyed are investigating the ability to enable mobile payments for flights and ancillary services.
Acording to the report: “There is a particular drive for this from emerging markets, where the ‘mobile wallet’ is seen as a secure, long-term replacement for cash.
“Location-based and social network-ing services are also highly prioritised, with one Latin American carrier seeking to integrate its services with the popular social network Foursquare to enable check-in from airport shops.”
Amadeus vice president airline IT, Julia Sattel, commented: “The challenge for the industry is to deliver an intuitive and compelling mobile user experience … Instead of just transplanting what airlines do online to the mobile device, we encourage our customers to explore what can be done to exploit the unique characteristics of mobile.”
Travel Tech’s Norm Rose said: “Essentially, airlines need to work out how to effectively monetise the mobile channel.”
He said they have an opportunity to use mobile technology “to allow incremental sales and encourage increased brand loyalty”.
Source: Amadeus