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Big Traffic Author of this article: Sun Zongxun 2016-12-27
October air travel data released by securities brokerage firm Jefferies,Global aviation industry growth continues to slow down,The future of each airline company is unclear;Ryanair, which has just lowered its profit target for next year, has launched in-flight shopping,Ryanair CEO Michael O’Reilly wants Ryanair to become the “Amazon of air travel”。
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Ryanair CEO Michael O’Reilly wants Ryanair to become the “Amazon of air travel”,This expectation seems to be prescient at present。October air travel data released by securities brokerage firm Jefferies,Global aviation industry growth continues to slow down。The future of each airline company is unclear,Even Ryanair has just lowered its profit targets for next year。Amazon is like an ATM,At least one of the series of promotions it launched this summer increased its sales by more than 50%。

For Ryanair (and its large and low-cost peers),The sales part of non-flight content that has continued to achieve impressive growth in profits is undoubtedly the sales part。Therefore,Ryanair has made it clear to its investors that it is promoting passenger growth at all costs。Of course the price is to reduce the ticket price (the ticket price fell by 10% from the first half of 2016 to 2017),Also invest heavily in increasing connectivity!Indeed,Ryanair wants to reach Amazon’s customer base,There is still a long way to go。As of the end of 2015,Amazon’s customer base has exceeded 300 million。But,Currently estimated by Ryanair,By 188bet sports betting app download the end of 2017,The number of members of its App "My Ryanair" will increase from 15 million to 25 million at the end of September this year。 

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“More and more customers want Ryanair to launch products other than flights。We think this is a natural outcome for Ryanair.com to become the Amazon of the aviation travel industry," O'Reilly said in an interview with Reuters。Although Ryanair’s ancillary revenue does not rank high among airline companies,But its ancillary revenue reached US$1.7 billion last year,Accounting for more than 20% of its total revenue。And Ruian’s plan is to “increase the proportion of additional revenue to 30% in the next four years”。 

Early November,Ruian said at its first half data conference,“Ryanair’s Labs tools, a digital IT innovation hub, have driven traffic to Ryanair’s official website、The booking volume and additional service revenue through Ruian App have increased greatly。”Ryanair’s strategy is to “increase sales of reserved seats”、Promote sales of Business/Leisure Plus products and promote fast-track services where customers can purchase discounted tickets during the booking process”。The surge in online sales is expected,But that’s not the only reason Ryanair has been publicly mentioning free flights for a decade (although it has promised that fares will only be reduced by 7% over the next six months)。According to The Guardian,O’Reilly said at the Airport Operators Association conference in late November that “the deals offered to Ryanair by European airports are increasingly attractive,There may even be a reduction in air passenger tax”,And this may prompt Ryanair to launch free flights。“We will share the airport revenue from all the people traveling through the airports,And get a share of the airport’s shopping and retail revenue,To 188bet app download obtain income,"O'Reilly said。Actually,List displayed by Statista,Among the airlines with the highest ancillary revenue share of total revenue and the top airlines selling low-cost flights,Ryanair is only ranked fifth。

In view of the difficult industry environment,Currently all companies in the industry are trying their best to take advantage of the add-on sales market。According to data from the civil aviation industry research organization IdeaWorks,Spirit Air, the ultra-low-cost airline with the highest ancillary revenue in the United States last year,The proportion of its additional revenue in total revenue reached 43%,Followed by its American counterpart Allegiant Airlines (38%)、Hungary’s Wizz Air (36%) and UK’s Jet2.com Airlines (29%)。But,The one who really made a lot of money on add-on sales,But it is a large American airline,Of which United Airlines ancillary revenue is US$6.2 billion,US$4.7 billion for American Airlines,Delta Airlines is $3.8 billion。All three major airlines have adopted the business models of their low-cost competitors。 

Add-on sales is a rapidly growing market。Calculated by IdeaWorks (in a report compiled for online car rental company CarTrawler),This market was worth $59 billion last year,14% increase from 2014。This research institution also stated,If subdivided,Of which US$36.7 billion comes from the sale of in-flight meals、Baggage check、Luxury seats、Priority boarding and other items。The remaining $22.5 billion comes from commissions from selling frequent flyer miles and selling services such as hotel accommodations and car rentals。

IdeaWorks cited Delta Airlines as an example。This airline generates over 62% of ancillary revenue from its SkyMiles frequent flyer program,But it also launched the "Delta Comfort" package product。Qantas earns 38 per passenger through 188bet sports betting app download its frequent flyer program.$38 additional income。Another service that is increasingly popular among airlines and passengers is in-flight Wifi (relevant data can be found on Google,Therefore, the sources of additional profits for each airline may be limited)。

According to Airbus’ latest industry review,By 2020,Airlines’ additional sales revenue could reach US$130 billion。Airbus believes a lot of growth will come from real-time purchases while on the plane,Instead of coming from the booking channel。It also pointed out,Airlines “facilitate” connectivity in order to increase sales of additional content,The product retail effect brought by online virtual reality is much better than letting customers put products in their shopping cart! 

Jefferies said,Air passenger volume increased by 1 in October 2016.6%,In September and October 2015, they increased by 3 respectively.2% and 7.6%。This brokerage firm represents,From these data,The growth of IATA airline passenger numbers in October this year may slow down compared to the same period last year,It will only grow by 5% to 5.5% (IATA airline passenger volume increased by 7% in September this year.6%)。According to Jefferies data,U.S. airline passenger growth in October slowed down compared to September,Increased by 2 in September.7%,In October, it only increased by 0.6%,Among them, only JetBlue and Northwest Airlines have experienced an increase in passenger numbers (an increase of 6 respectively.5% and 5.2%),All major U.S. airlines have declined by more than 1%。

There are many thorns ahead

A large number of industry commentators, including travel management consulting firm Advito, predict that,Airlines will still face difficult situations in 2017,And it is predicted that ticket prices will hardly increase。According to Advito,Business class fares on global 188bet app intercontinental flights should increase by 1%,Which to North America、Business class fares in Europe and Africa will increase by 1%。In terms of economy class,Only intercontinental flights to Europe are expected to see an increase in economy class fares。The outlook for business class fares for flights within various regions is more optimistic,Business class fares for domestic flights to Asia and the Southwest Pacific will increase by 3%,North America and Africa will increase by 1%。For regional economy class,Only economy class fares within the Southwest Pacific are expected to increase。 

According to Jefferies,Capacity regulation seems to have become the focus of international airlines (such as Delta Air Lines and Southwest Airlines),But Middle Eastern airlines “seem to be more interested in gaining market share”。The battle for market share is global,This has an impact on revenue per seat。JetBlue plans expansion in Europe;Low-cost carriers Norwegian Shuttle and Singapore Scoot are both expanding,The same is true for Alaska Airlines and Wizz Air (Wizz Air profits increased by 39%)。Lufthansa Group and Air France-KLM Group are moving further into the low-cost field。SpiceJet India is improving its profit margins and capacity。Emirates Airline’s profit fell 64% in the first half of this year,It is currently considering launching cheaper long-haul flights to resist the brutal competition brought by low-cost airlines。

Therefore,For a large number of airlines,Airbus’ forecast of $130 billion in additional revenue won’t happen overnight。At least in Ryanair’s case,Once the airline increases any additional charges,It seems that some media will publish articles on how to avoid paying such fees,Therefore,Launched online shopping and provided home delivery service,Perhaps a more stable source of income。

*This article was compiled by eyefortravel。

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