Knowing your customers is critical to long-term profitability in any business, as much for airlines as butchers, bakers and computer-chip makers. No group showcases diversity more than long-haul passengers. Although each passenger is an individual, they also all have things in common, and characteristics represented only once or twice on one flight can add up to a high revenue value across a network.
Understanding the trends and patterns which represent distinctive passenger profiles can be valuable to enterprising designers seeking new ways of attracting high fare passengers and selling seats that would otherwise go unsold. Every airline has data about it’s passengers just waiting to be translated into profitable products and services. Mining this information is one of the first steps when convincing a cost-conscious budget holder that funding services beyond the bare minimum is worthwhile.
In this series I am writing about how designers can collaborate with revenue managers to find the business case for product developments that are financially worthwhile. But when it comes to data you will need to look to a few other departments.
Network and schedule
The cities you connect with determine the passengers you carry. A network planning department will have insights on where passengers originate, transit and turnaround a useful indicator of passenger preferences for catering and service. Network planning will be able to tell you about existing flights, new destinations and schedule or capacity changes, as it is important to avoid offering breakfast on lunchtime flights or using equipment that will not fit in the galley that has been flying a particular route since last month.
Every airline holds revenue data from e-tickets, which will align closely with network planning’s information. Importantly, you can learn which groups of passengers contribute the most revenue and tailor spend on menus accordingly.
Frequent flyer data
Frequent flyer programs will have a large amount of detailed information about the highest value customers, but for many airlines most travelers are not members, so pursuing this avenue may offer only limited value.
Many airlines maintain records of every passenger, including nationality, age and gender, which is extremely useful for menu design and service development. There is often a reluctance to allow its use for commercial purposes though. Often it seems to be held by safety or emergency specialists, although I am not sure why.
Primary research opportunities
Sometimes data you already hold is not quite enough to prove that developing products for particular passenger profiles will be worthwhile. Using surveys is a tried and tested method to get the remaining nuggets of information together and it should be possible to insert a few questions into your airline’s existing research program.
Aircraft Interiors Expo is coming soon and beautiful cabin concepts will be displayed. Stars of the show will include charismatic first-class products, but sadly interest will be limited as many airlines are skeptical about investing in first class. Next time I will present the forgotten revenue case for first-class.
Oliver Ranson is the founder of Ranson Pricing. Oliver was educated at LSE, where he took a First and then a Masters in economics. The rigorous microeconomics grounding that he received at LSE formed the basis of his passion for pricing.
After graduating Oliver joined leading consultancy Analysys, where he helped a mobile phone network operator justify their prices in front of their local regulator and conducted research for the European Commission.
He then moved to revenue management at Qatar Airways, creating from scratch the strategy framework and tools necessary for the airline to completely redefine their pricing. Before founding Ranson Pricing he was head of product research at Qatar Airways, where he applied his deep understanding of pricing concepts to investigate how product enhancements drive revenue.
Oliver believes that effective pricing based on both rigorous analysis and sound intuition is the key to long-term profitability.