Unpacking Ancillaries: Introducing Flexibility and SLAs

By Branchspace | 21 May 2020

One of the long-aired grievances with airlines is the hidden fees passengers encounter in their journey up to departure. The experience is universal, and for that reason, some Hollywood comedies latch onto scenes where charges for excess baggage weight cause the protagonist to dress in five jackets and three trousers in protest before hurtling towards the departure gates. Despite the ubiquity and reality of this frustration, little has changed in the passenger experience over the years.

Additionally, while complexities around ancillary products may include some relatively minor areas for improvements, acknowledging their current flaws could go a long way for strengthening customer trust. The most important step in taking responsibility for shortcomings would be improving transparency, fairness and flexibility in ancillary products.

Flexibility Policy

Customer frustration over ancillaries generally grows out of encountering obstacles set by an inflexible refund or change policy. To a certain extent, inflexibility governing certain inventory-dependent products (e.g. the flight itself, upgrades, and seats and meals) is generally understood, or at least accepted, by passengers. However, rules governing other products – nonrefundable fees pertaining to onboard Wi-Fi, bags and lounge access, to name a few – can easily ruin a trip.

To introduce customer-centric flexibility that remains beneficial at a commercial level, we see several areas for adaptation:

Purchased Luggage

Flexibility for purchased luggage could be delivered by authorising payment online for one or several pieces of luggage, and capturing only what the customer brings to the airport. For example, passengers could select one 23-kg checked luggage and one overweight 25-kg luggage and can confirm the price upfront. Having checked in online, when the passenger weighs in at the drop-off counter, the card they used to authorise the check-in could be charged only for what they’ve brought to the airport. While it is not current practice that the PAX pays for the exact weight of baggage, slightly reversing the current procedure may encourage passengers to feel as though they’ve received a fair price without disrupting airline baggage capacity management.

Onboard Wi-Fi

Accessing the internet inflight has become a necessity, especially for business travellers looking to make the most out of their time-strapped to an airplane seat: not getting to use what you paid for because of turbulence or other uncontrollable experiences can be irritating for the passenger. Similar thinking to our baggage concept could be applied for onboard Wi-Fi. Some airlines offer several Wi-Fi packages and the bundling allows for little flexibility. Instead of pushing passengers into time limits, after authorising payment for a given package, payment could be captured for only what was used.

Lounge Access 

Lounges can be palaces of comfort and refreshment for passengers tied to long haul flights with multiple stopovers; yet they can only be enjoyed if the passenger is actually at the airport, which can sometimes be out of the passenger’s control. Rather than subject passengers to use-it-or-lose-it pre-purchased lounge access, the airline could engage with customers who did not enter the lounge and offer a comparable lounge voucher valid on their next flight.

       Fare Freeze

In some carriers’ “Time to Think” implementations, customers pay a small fee upfront in exchange for a fare freeze for a given itinerary, which is refunded upon payment completion. Rather than locking passengers into certain flights, allowing passengers to change to another itinerary (for which the fare would not have been frozen) yet using the money paid upfront could introduce flexibility that more hesitant travellers need in regards to the current general uncertainty over travel restrictions

Service-Level Agreements

A less common practice is Service-Level Agreements for ancillary products. Even before the flight takes off, for a myriad of reasons, a major concern for time-strapped passengers checking luggage is the final delivery time on the baggage carousel, which may significantly vary from an airport to another.

Introducing delivery time guarantees for passengers could incentivise them to book––and these are not unrealistic. As the passenger’s trip does not end at the airport, helping the passenger in the final legs of their journey could go a long way towards creating repeat customers. For example, a few major US airlines offer a 20-minutes guarantee for baggage delivery on domestic flights. Although this is a welcomed initiative, both promises are based on the actual time of arrival, as opposed to the scheduled. The distinction between scheduled and actual can be easily missed, and for time-strapped business travellers, the hassle of speaking with customer service is less than ideal. To go one step above current practices, airlines could proactively engage customers on late flights and provide an option for in-town delivery, ensuring the passenger’s trip is uninterrupted.

Key Takeaway 

Unlike the flight ticket itself, most ancillaries are non-perishable products as they do not depend on inventory. In other words, the airline is not losing any money if checked luggage or onboard Wi-Fi aren’t used. Providing more flexibility in non-perishable products by refunding or providing vouchers for whatever the customer purchases but does not use could easily encourage future bookings.

Additionally, as services vary airline to airline, by providing SLAs and other warranties could improve customer trust. Ultimately, the steps an airline takes towards flexible ancillaries and SLAs represent an investment in an unparalleled service that encourages warmer brand perception and could pay off in increased bookings.

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