A closer look at the benefits and challenges of ancillaries

Ancillary offerings create huge revenue generation opportunities for today’s travel providers. Ancillaries are a la carte menu options offered on top of a piece of inventory that you own. So, with airlines for example, the airline ticket would be the core component, and ancillary offerings may include seat selection, luggage, priority boarding, meals, entertainment, lounge access and more.

Recently I participated in the Travel Is Your Business podcast with Werner Georg Kunz-Cho, co-CEO of travel technology company Fareportal. We discussed the challenges and benefits of selling ancillaries within the travel booking process.

Bundling and unbundling

Not so long ago, the purchase of a full-service airline ticket included everything. But today, by unbundling and rebundling different aspects of the travel experience, airlines earn trillions of dollars through ancillary sales. However, all this unbundling/rebundling causes a lot of confusion in the marketplace from the consumer’s point of view.

Take something as simple as baggage. Some airlines offer free baggage based on a specific number of pieces, while others do so based on weight. Because all airline tickets are not created equal, transparency is crucial.

Amadeus, and our partner companies such as Fareportal, work to eliminate confusion for the consumer. Using Amadeus’ technology, Fareportal brands, CheapOair and One Travel provide information in a clear and succinct way, so customers can easily compare apples to apples – identifying the true differentiation between airlines when booking a flight.

The servicing challenge

While selling ancillaries is easy, managing and servicing them can be quite complex, with fare rules differing significantly between airlines. When a flight change occurs within an itinerary, it’s not always clear whether an ancillary was associated with it. A great example is when I was recently scheduled for a specific flight. My meeting ended early, so I paid for a seat on an earlier flight. The airline ended up canceling that earlier flight and I was put back on my original flight yet was still charged for that seat. These are the types of servicing issues that still need to be worked out within the industry.

Leveraging non-air ancillaries

Amadeus focuses on ways we can bring value not only for our customers, but for our customers’ customers – the travelers. We understand that almost half of an individual’s travel budget is spent in-destination, and with the rise of big data, there are many new revenue opportunities popping up. By capitalizing on the mobile platform, we help our customers sell non-air ancillaries like hotels, cars, airport drop-offs and pickups – all of which help to create a richer travel journey.

As we look to the future, knowing how to leverage the power of air and non-air ancillaries will be a key determinant of success.

 

Want to learn more about how Amadeus can help you manage and benefit from ancillaries? Listen to this episode of the Travel Is Your Business podcast.

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