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Top 10 Trends for In-flight Retail

As ancillary revenues gain importance, in-flight retail is poised to grow on the back 
of a creative application of improved technology

  • By Shalini Seth | Specialist Writer
  • Published: 00:00 November 19, 2012

  • Image Credit: Supplied
  • Passengers can use Wi-Fi to explore retail offers and in-flight entertainment systems

With space a major constraint, in-flight retail needs to rely on creative solutions to be profitable. Technology and innovative products are set to change the way in-flight selling operates — here are the trends we foresee for the near future.

INNOVATION

Airlines stand out thanks to innovative offerings. “Airlines are driving to create additional revenue streams through in-flight innovation. For example, Korean Air has a physical shop on board the A380, and SAS sells guides to destinations written by their crew,” says Rohit Talwar, CEO at Fast Future, a UK-based consultancy.

AirBaltic, for instance, has introduced the chocolate postcard. Passengers can purchase this in-flight postcard, which comes with a 100g-chocolate bar, add a greeting and give it to cabin crew for posting within Europe to addresses anywhere in the world. On board Amsterdam-based operator Transavia.com, passengers can receive 
a fish pedicure.

COMMUNICATE BEFOREHAND

In-flight retail loses out as shoppers exhaust their budgets before boarding. The key, says Darren Payne, Managing Director of UK-based Evolution Business Consultants, is to communicate beforehand what they can expect on board: “You don’t know what is on board to buy, so by the time you get there you may have already purchased your gifts. The availability of in-flight products needs to be communicated much earlier — when you are booking your flight. Passengers should also be able to potentially pre-purchase products for pickup in flight.”

SIMPLIFY

Improved in-flight technology is helping airlines realise how much simpler things can be. David Bruner, Vice-President Global Communications Services at Panasonic Avionics Corporation, says, “One of the difficulties in our business over the years has been that you had to have programmers to make every change. Now it is all web development. Anyone from the airline who can prepare their website can do this. It’s a lot easier and a lot faster. The airline has more control. The tools are easy and you can make the experience more responsive. You can run a promotion one day and it could be gone the next. It used to be cost prohibitive to even think like that. The cost is probably a thousand times less now.”

Emirates Airline’s signature Information, Communication, Entertainment (ICE) platform, powered by Panasonic Avionics’ eX2 system, is an example of newer communications platforms.

Over-regulation is one of the reasons in-flight shopping has not taken off, experts say. The future, they say, lies in making it easier for the shopper — broader shopping categories with the convenience of home delivery are on their way.

ONWARD TRAVEL

Airlines are finding that their relationship with passengers can go beyond a flight. In a survey, Toronto-based technology company GuestLogix found that more than half of passengers would take advantage of destination-related offers on board a flight. Payne says, “That is certainly happening in the UK, where easyJet is now selling train tickets. They also sell bus tickets on the flight. You don’t have to queue up for them later. For the passenger there is no additional cost. A lot of airlines already sell hotels or car hires.”

The next big thing could be car parking — some passengers can pre-book car parking space so on arrival at the airport, barriers go up as the car is recognised.”

IN-FLIGHT EXCLUSIVES

Passengers travelling on Saudi Airlines, Qatar Airways, Oman Air, Kuwait Airways and Etihad Airways are already offered in-flight exclusive perfumes Voile Noir and Voile Blanc.

Emirates Airline partnered with Montblanc to create an in-flight promotion that gave customers the opportunity to win a luxury trip to Hamburg, if they purchased a Montblanc StarWalker A380 fineliner from Emirates’ duty free. Payne says, “Airlines have to create the point of difference. If I cannot get something outside, it is probably the reason why I should buy it in-flight.”

POP-UP STORES

Last year, premium passengers on Korean Air’s Airbus A380 were introduced to a duty free showcase. The shop replaces 13 seats on the aircraft but Koreans are known to be dedicated shoppers, and the airline claims the experiment has been successful.

A related trend is the expansion of space devoted to selling on board. “We could see more stores opening with a smaller footprint or in a temporary pop-up format, and more exclusive tie-ups with airlines and airports. For example, All Nippon Airways (ANA) has created in-flight pop-up stores offering exclusive products from French retailer Colette,” says Talwar.

CASHLESS

As on-board connectivity grows and magnetic strip cards become the norm, payments will incorporate real-time credit card authorisations to support higher-value transactions. When airline staff do not have to collect change and struggle with currencies, they will probably be more inclined to sell. Payne says airlines may also adopt a mix of credit and/or loyalty/frequent-flier miles for cashless on-board shopping.

GOING ANCILLARY

Budget airlines have led the way in maximising ancillary revenues. Now full-service airlines are starting to catch up. “The industry, especially legacy carriers, are just starting to see that there is a lot of money from ancillary sources. Recent start-up or low-cost airlines have got it — they are selling ancillary products,” says Payne.

KNOW YOUR CUSTOMER

Talwar says customer-centric selling, as is the case with every other sector, is going to be a trend in on-board retail as well. Know your consumer, or KYC, is crucial — regional variations, peculiarities of different destinations and consumer quirks are becoming more important. Carriers that understand this will win. “The spending of Asian and Middle Eastern travellers appears to be less sensitive to economic trends and their spending profile remains high,” Talwar says.

BROADBAND

This will certainly change the in-flight world. In a controlled, Wi-Fi-enabled environment or through the use of smart wireless point-of-sale devices, passengers can explore retail offerings and in-flight entertainment systems.

Bruner says, “We help the airline use its in-flight entertainment system as a computer. We also provide a global broadband service to airplanes. You can use your own phone or iPad or laptop to connect to the system without even buying a Wi-Fi session. Next year, we are going to install it in another 600 aircraft, and it is very quickly going to change 
the industry.”