ANCILLARY SERVICES DISTRIBUTED ON AIRLINE APPS 3Q19
Low-Cost Carriers vs. Full Service Carriers

Ancillaries are the fastest-growing revenue stream for airlines. There’s no end to what they can up-sell or cross-sell after seats. Moreover, IATA’s New Distribution Capabilities (NDC) is ushering in an era of how airlines will sell them. videc’s App in the Sky examines Android apps of 22 low-cost carriers (LCCs) and 48 full-service carriers (FSCs) globally to see how many offered the below unbundled products in 3Q19.

PRIORITY CHECK-IN

It is evident straight-away that LCCs are adding features on their apps faster than the FSCs are. At 86%, LCCs lead the way in terms of offering priority check-in in 3Q19. Meanwhile, 69% of the FSCs have incorporated priority check-in in their apps. Either way, both types of airlines are rolling out the red carpet to deliver this option at a fee. Offering this via their app allows users who are not part of their high-value frequent flier program to buy this.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

PREPAID SEAT SELECTION

There is a marginal gap between the number of LCCs and FSCs that offer paid seat selection I in their Android apps. While 68% of LCC apps in 3Q19 offered paid seat selection, the percentage for FSCs was at 65%. This compared to 75% for LCCs and 55% for FSCs in 2Q19. Offering paid seat selection option on their app indicates how pervasive and popular this option is among fliers.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

ADVANCED BAGGAGE PURCHASE

The option to pre-purchase additional baggage ranks third in the overall scheme of ancillary products that airlines sell via their mobile apps. The 3Q19 analysis shows that more LCCs are taking this feature seriously with 59% of them adding it into their apps as against 29% for the FSCs. This could be because often times, the extra luggage allowance purchase happens over-the-counter while checking-in. Also, some FSCs already offer higher baggage allowance. Either way, if airlines want users to utilize this app option more frequently, they will need to cross-sell the advantages of pre-buying this – on the app itself.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

ADVANCED MEALS PURCHASE

There is disparity between the number of LCCs that offer the option of meals purchase on their Android app as against the number of FSCs that do. While 50% of LCCs offered this feature in 3Q19, this stood at 29% for FSCs. But again, this could be because FSCs typically include meals in their bundled fare rather than upselling. In case of LCCs, meals purchase also happens either post-booking or directly on the flight. Both types of airlines have done rather little to upsell meals via this channel.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

PRIORITY BAGGAGE

Of the total number of airlines studied for this 3Q19 report, 41% of LCC apps feature priority baggage purchase, as compared to 17% for the FSCs.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

ADVANCED INSURANCE PURCHASE

Even though flight disruption poses a significant threat to airline operations and expense line – particularly in Europe, which has stringent Air Passenger Rights – not many airlines offer this. Overall, airlines have some more ways to go in integrating travel insurance in their mobile shopping path. The analysis revealed that 36% of LCC apps offered insurance purchase in 3Q19 while the figure for FSCs rested at 21%.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

DUTY FREE/ RETAIL SHOPPING

Airlines are either retailing onboard or tying up with partners on the ground, especially at airports. But a few are taking e-retail a step further and are incorporating shopping within their apps. While 4% of the LCC apps analyzed for this 3Q19 report offered duty-free shopping option to their users, the share was higher at 9% for the FSCs. The incidence of duty-free shopping in airline apps has decreased quarter-over-quarter, where it stood at 15% for LCCs and 14% for FSCs in 2Q19. The retail opportunity is vast and those doing it right stand a chance to gain further insight into their travelers’ lifestyle.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology

WI-FI PURCHASE

Wi-Fi passes haven’t reached mainstream due to a combination of factors. Chief among them are massive capital expenditure on part the airline, and varying telecom regulations by country in case of overseas flights. Just 8% of the airlines offering Wi-Fi purchase in 2Q19 is surprising but its fast quarter-on-quarter growth gives this service hope. From a miniscule 3% in 1Q19, this more than doubled which is a sign that more airlines need to join in to not just make this a more popular service but also to make the rates more competitive.

Low-Cost Carriers

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Full Service Carriers

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Base: 48 Full Service Carriers & 22 Low-Cost Carriers | View Methodology


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