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Subscription services may boost airline revenue going forward

04/29/2020| 4:38:06 PM| 中文

67% of respondents will consider subscription service. It is estimated there will be a lot of money to be made from it.

Airline passengers are ready for change, and subscription-type services could be one way forward.

This is according to airline revenue management technology specialist PROS, which has released research on potential airline subscription acceptance.

According to PROS' survey, 80% of travelers say they would consider buying an airline membership if it came with additional, elite privileges.

When asked whether they would consider purchasing an annual airline subscription with unlimited flights for a flat fee, 67% of respondents say yes.

The survey of more than 400 consumers also asked how much travelers would pay for a pass enabling unlimited economy seats, with 28% saying €2001 to €3000, 27% saying between €501 and €2000 and 21% saying €1001 to €2000.

Mike Slone, vice president and principal of travel retail at PROS, says he believes airlines and consumers both want change and the COVID-19 crisis is giving airlines the chance to reset and rethink their retailing strategies and “come out of this stronger.”

He says subscription services have not taken off in the past because airlines have not seen them as a serious part of their revenue model, but he believes higher adoption would come if subscriptions were core component.

“No one would have believed that we could listen to any song at any time. We can continue to keep a very closed mindset about the way airlines typically do [things], or we can actually think about other industries and start applying those [ideas].

“I believe airlines and especially consumers are ready for a different model, and there is a lot of money to be made from it. I believe that a pass or alternative type of ticket is a base for what airlines can use to model their economics after that.”

He points to airlines such as Volaris, which has seen success with subscription-type services, as well as other low-cost carriers such as easyJet with its easyJet Plus membership service that offers built-in benefits.

 “Memberships or passes are essentially pre-paid ancillaries; you are getting money from customers and you are buying their loyalty in those commitments.”

However, Slone notes that these initiatives will only be successful if airlines build in flexibility around cancellations and modifications and make them very easy to manage online.

A recent paper from IdeaWorks says that airlines would need to strike a balance in charging for ancillaries and bracing for additional scrutiny from consumers, who will have read headlines about billion-dollar bailouts during the COVID-19 crisis.

Airlines tapping into the subscription model would also see them following the recurring revenue bundle, or "rundle," trend, which gives them the opportunity to offer consumers more services.

The trend was referenced by Kara Swisher at last year's Phocuswright Conference, where she pointed to large brands such as Nike and Apple using the technique to have a deeper relationship with customers.

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TAGS: PROS | subscription | loyalty
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