Airlines in Asia-Pacific should look to American carriers to boost their onboard retail revenues, according to John Devins, director for Asia-Pacific at retail technology supplier GuestLogix.
 
Devins said regional carriers need to broaden their thinking on in-flight sales, to consider offers beyond traditional duty free categories such as jewelry, fragrances and liquor.
 
He said airlines are missing a major revenue opportunity by neglecting the potential of onboard sales.
 
Devins said: “GuestLogix estimates that given the right strategy, revenues could increase from US$3.8 billion in 2008 to nearly US$17 billion by 2011 from global onboard shopping and estimated food & beverage sales, based on an approximate conversion rate of 1% of passengers. This is a huge figure by any airline’s standards.”
 
“Many airlines in the region focus largely on the sale of food & beverage items onboard,” he said. “But onboard sales can comprise many more innovative products. For example, what if you could sell tickets to Disneyland on board a Hong Kong-bound flight, or a train ticket to the middle of the city? This would open up a whole new sales channel to airlines and attractions.”
 
GuestLogix recently conducted two surveys on in-flight retail. The first involved more than 3,500 participants from Germany, the U.S. and Hong Kong – the home of one-third of respondents. The second, an online poll, canvassed the views of over 150 travelers from Asia-Pacific.
 
“[The surveys],” said Devins, “suggest airlines need to address ground transport sales as the most viable and profitable onboard opportunity. This refers to the sale of airport transfer tickets, such as bus and train tickets, and limousine services in destination cities.”
 
GuestLogix’s online poll found that the onboard sales conversion rate for transport ticket sales could far exceed the 1% rate on which it has based its revenue projection, with up to 80% of respondents saying they would buy transport tickets in flight for sheer convenience.
 
“The Asia-Pacific online poll found that a high number of respondents were comfortable with making onboard purchases, and were already doing so,” Devins said, “with 63% [having] bought items onboard during their last flight.”  
 
He said that even though the ancillary (non-ticket) industry in Asia-Pacific is not as mature as that in Europe or North America, regional duty free service providers such as the In-flight Sales Group had already made the transition to onboard shopping, offering passengers products beyond the traditional cosmetics, jewelry, electronic gadgets and alcohol purchases found in airports. 
 
 Devins said European low-cost carrier Ryanair offered a good example of an airline boost its in-flight revenues.
 
“Ryanair offers its passengers … purchases of everything from hotel stays and car hires to scratch-and-win tickets and electronic gadgets,” he said. “In fact, more than 20% of Ryanair's revenues now come from non-traditional sources.
 
He added that Malaysia’s AirAsia X has been one of the first Asian airlines to model itself on Ryanair’s approach to ancillary sales.
 
Devins said the economic downturn ought to prompt Asian carriers to “focus more on identifying new revenue streams in the years ahead by providing à la carte services and commission-based products in addition to basic flight offerings such as insurance and car rentals.”

John Devins, director for Asia-Pacific, GuestLogix