Dynamic bundling of ancillaries could be future of airline sales

By Kate Rice
The next big thing for airline ancillary services could be the dynamic bundle, a package of extra features and add-ons that airlines are beginning to create for particular types of clients at particular times.

Delta Air Lines, which leads the airline industry in this trend, has introduced Smart Travel Pack, a bundle of ancillary services that is available through Jan. 5. Though it is currently available only to SkyMiles members and on Delta.com, the airline has been talking to travel agents about how they can help sell bundled offerings.

Farelogix, meanwhile, has incorporated what it calls “dynamic bundle capability” into its merchandising software, FLX Merchandise (FMS2), enabling airlines to create and price bundles of ancillary services for different markets.

A “comfort bundle,” for example, might include noise-cancelling headphones, a pillow and blanket and a premium seat. An “executive bundle” could offer WiFi, priority boarding and business seating that includes a power port.

Travelers could even create their own bundles a la carte, adding one from Column A, one from Column B, for example.

Farelogix said the technology “takes personalization and trip customization to a new level.”

At this new level, the airline seat is no longer shopped for and purchased on the basis of schedule and price. With dynamic bundling, a trip can be searched for and priced based on particular ancillary features that travelers value.

For agents, this presents new challenges as well as new opportunities.

In the case of Delta’s new product, agents who have seen it say they’d like to sell it. The Smart Travel Pack, priced at $199, includes the first checked bag, priority boarding, access to preferred seats and discounts on economy comfort seats.

Although only SkyMiles members can buy it, they can use the benefits for up to eight of their travel companions traveling on the same reservation.

Once purchased, the benefits of the Smart Travel Pack will be included for any travel during the promotional period when customers include their SkyMiles number in their reservation.

Delta unveiled Smart Travel Pack on Sept. 18, at Delta Insights, its meeting for top-performing agencies. Tim Mapes, Delta’s senior vice president of marketing, did the presentation, and agency response was enthusiastic, according to Jim Osborne, vice president of air, space and specialty products for Virtuoso.

“We all asked if we could sell it and be compensated for it,” he said. He is optimistic that a solution for agencies to sell these and similar dynamic packages will be possible.

Delta spokesman Paul Skrebec said the airline recognizes the appetite in the agency community to sell ancillaries. He said no announcements were imminent but Delta, given its work with Travelport and Amadeus in selling Economy Comfort seats through travel agencies, has clearly started to move down the path of agents selling ancillaries.

Jim Davidson, CEO of Farelogix, said, “The floodgates are opening,” suggesting that airlines might soon be rushing into bundling. He said seven airlines, including United, have the FMS2 platform and the dynamic bundling capability was added in response to their requests. (Delta is a Farelogix customer but is not using FMS2 for its Smart Travel Pack.)

Merchandising is evolving quickly, according to Davidson. At first, the technology enabled static listings of optional services that he compared to a catalog. But FMS2 and similar technologies enable airlines to see what sells and what doesn’t.

Davidson said these new technologies enable airlines to perform what he compared to an instant survey.

“You can start doing this stuff and see what customers are willing to pay for and maybe what they’re not willing to pay for,” he said. Airlines can run a bundle for three weeks and, if it doesn’t produce results, change it, Davidson said.

 
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