American Airlines has begun a limited test of the retail concept. It is selling Heathrow Express train tickets on London-bound flights, and it is offering in-flight Internet access and items from SkyMall — the glossy catalog that has had a reserved space in the seatback pocket of airliners for 20 years — on 165 airliners.
“We wouldn’t invest if we didn’t feel comfortable it would provide a fair rate of return,” said John Tiliacos, managing director of onboard products for American Airlines.
“Given where we find ourselves as an industry, financially it behooves us to identify every source of revenue we can identify.”
Other airlines declined to talk on the record about their plans, but nearly all the major carriers acknowledged that they were working on expanding retail offerings.
Whether air travelers will open up their wallets once the aircraft pushes back from the gate remains to be seen. But Michael Levy, a marketing professor and the director of the Retail Supply Chain Institute at Babson College in Massachusetts, expects that they will.
“Look at what’s going on in airports,” he said. “Anytime you have customers who are captive, who have nothing better to do, they’ll shop.”
Passengers can learn about products for sale from seatback advertisements, brochures and announcements by flight attendants and gate agents, as well as on airline Web sites and through social media. Finding the right mix of products is important because if an airline offers the wrong items, it could irritate its customers.
In the past, customers could browse the SkyMall catalog, but placing an order could be done only after the plane had landed. With the addition of what SkyMall’s president, Christine Aguilera, calls “a cash register in the air,” sales can be completed on the plane. “These are some of the greatest consumers on the planet,” she said.
The job of selling falls to flight attendants, and some in the United States have already expressed concern. In a letter to American Airlines, the Association of Professional Flight Attendants wrote that sales commissions with SkyMall or any other vendor must be negotiated as part of the labor contract with the airline.
light attendants at other airlines are also worried that retail commissions may be used to replace salaries, according to Corey Caldwell, a spokeswoman for the Association of Flight Attendants. “If airlines are encouraging flight attendants to participate in selling of products and services, it needs to be done when the flight attendant has completed safety and security activities onboard the flight.” Ms. Caldwell said. “It’s definitely a proceed with caution type of thing.”
Currently, the average amount a passenger spends with an airline after purchasing a ticket is $1, according to statistics prepared by GuestLogix. At Ryanair, by contrast, Mr. Cawley said customers spend on average about $15.
But even if airplanes begin to resemble retail space, Mr. Cawley of Ryanair insisted that its business was transportation.
“The single most important thing is selling the airline ticket,” he said. “All the ancillary sales flow from that.”
Tags: american airlines, sky mall
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