This week, we discuss articles related to Delta's new rewards and upgrades program, revenue management in the age of personalization and Lufthansa's clash with low-cost carriers.
Revenue Management & Personalization
The latest from Tom Bacon (who is a must follow for anyone involved in revenue management) on Eye for Travel outline four ways to rethink airline RM in a personalised world. Bacon's points are as follows:
- Personalisation requires new micro-segmentation
- New ancillary options mean airlines – and RM – can design different experiences for different passengers
- Personalisation is likely to be the responsibility of cross-functional teams representing a variety of commercial and operations functions as well as new data scientists.
- Personalisation will mean constant learning, more granular pricing, and potentially changing segmentation based on machine learning.
Bacon makes excellent points, which can all be summed up by taking a holistic view of the process. At Kambr Media we call this Total Airline Commercial Optimization (TACO). This will be something we'll be covering more often and more in-depth, but it is essentially bringing together the entire customer process which Bacon outlines especially with points two and three.
Delta's Reward Program
Seth Miller writes for Paxex.aero, Delta Air Lines is selling more upgrades than ever, and a growing number number of those travelers are choosing to pay with their SkyMiles points rather than cash. The carrier is now a half year in to its renewed program selling upgrades for SkyMiles points and more than half a million travelers have chosen the option.
Delta's strategy of treating points more like currency with a combination of dynamic upgrade offers is signifying a growing trend in commercial aviation loyalty programs. This works two-fold, it makes upgrades more accessible to passengers, while bringing a greater focus to ancillaries for the airline.
As more airlines revaluate their rewards programs to adjust to macro trends in the industry, it will be interesting to see how loyalty programs evolve over time.
Lufthansa's Class with Low-Cost Carriers
Lufthansa’s Chief Executive Officer Carsten Spohr has been critical of low-cost carriers, saying "flights for less than 10 euros shouldn’t exist.” He finds it to be, "economically, ecologically and politically irresponsible.”
At the center of Spohr's disdain is that these price wars are (in his opinion) forcing the industry down to the bottom, as these prices are simply not sustainable.
This is the latest example of the friction between full-service carriers and low-cost carriers. In some ways low-cost carriers have been industry trailblazers, forcing distinguished airlines to adapt. A prime example is the mass adoption of a la carte pricing. Once only common with LCCs, now nearly every airline has deployed some form of the strategy.