Travel Analytics Blog
The IATA WPS Conference Journey – Aspirations Bridging Reality
Posted by Jonathan Boffey on Friday, October 24, 2014
The world can be theoretically a great place. I suggest theoretically because in some cases it has that potential and in other instances it already is. But most of the time it is somewhere in between the two. I say this because I have just returned from the major industry gathering of airline executives discussing, among other topics, how traditional long haulers can become value-driven low costers. I travelled to the event by taking a long haul flight but using a low cost carrier as my main means of transport.
The conference in question was IATA’s World Passenger Symposium held in San Diego last week. A major theme of the conference was about the overhaul and modernisation of airline distribution, or NDC (New Distribution Capability) in industry jargon. Key discussions revolved around how airlines could migrate from being merely carrying people from A to B to being world class retailers of an array of products and services that enhance the travelling experience. Whilst NDC itself is still slightly futuristic, the concept of airline retailing in the form of ancillary services is already here, and already making a contribution to the bottom line for many airlines.
My journey involved flying from London to Los Angeles using Norwegian Air Shuttle’s (NAS) new long haul service. This recently introduced service (there are other US destinations too) is Low Cost Carrier (LCC) based – it has a cost model that is (loosely) based on the traditional short haul low cost approach of carriers such EasyJet, Ryanair etc. This new long haul service relies on cost efficiencies introduced by the new Boeing 787 Dreamliner aircraft.
There are some ironies here too – ancillary revenues have been an LCC speciality. IATA conferences are typically frequented by the traditional full service carriers (not the LCCs) and in recent years focus of the conference is given over to the LCC tricks of unbundling options and ancillaries to generate additional revenue – just think speedy boarding, seat reservations, and suitcases in the hold type LCC at extra cost.
So here is the essence of this blog. LCCs trying to be long haulers and long haulers trying to make use of LCC-style options. How does theory meet practice?
Firstly, the conference? It was an interesting review of what some carriers have been doing, what they might do and in particular how revenue management, seat pricing and how the $6 profit/per passenger/flight can be improved. Theory was mostly presented while the practical implementation stuff probably got addressed in tight huddles between suppliers and airlines. All very useful information that got shared and subsequently washed down with a decently delivered helping of ACDC’s Highway to Hell, by yes, a Bon Jovi tribute band at a gala dinner on an aircraft carrier.
So what about LCC long haul services and Norwegian? I don’t think anyone from Norwegian attended the IATA conference to either share or learn anything. The flight ticket was cheap so from a consumer point of view it achieved that objective. Even down the back of the plane, it was comfortable and uncomplicated too with the journey being pleasant. The meal, blanket, headphones and luggage were, as expected, revenue generating optional extras. I had opted for an offer bundle of meal plus luggage on booking so that took care of that side. Except for the missing blanket and headphones, readily solved by wearing a jumper and bring your own respectively, it felt remarkably like a full service carrier economy service! So far so good but then again the inflight retailing was just non-existent. NAS offers around 5 duty free items – of which two, Snus and Norwegian brandy, are a bit of a joke to US and UK citizens. What a missed retailing opportunity!
Even offering one of the many excellent Norwegian Aquavits, along with some good marketing about its history on the seat back screen, would have been a welcome step up. More choice and better product marketing using the ‘in your face’ multi-media screen would be easy?
So theory, practice and the gap between.
So I found Highway to Hell to be a better rendition than Living on a Prayer. LCCs that offer near traditional long haul flights and FSCs that want to be retailers with unbundled LCC offerings, take note. Overall, it wasn’t a bad ride to San Diego and back but it brings home the reality that there is a long journey ahead for all of them if they want to get to where they think they want to be, and where the consumer would already like them to be. Come to think of it, where did I put my copy of Don’t Stop Believing?