Customer Centricity Instead Of Passenger Handling Increasing - - PowerPoint PPT Presentation

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Customer Centricity Instead Of Passenger Handling Increasing - - PowerPoint PPT Presentation

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Customer Centricity Instead Of Passenger Handling Increasing Revenue In The Aviation-Eco-System Bucharest, November 17 th , 2010 CONTACT DETAILS: Daniel.Catana@atkearney.com +40 (21) 304 02 20 (Office) Air traffic is shrinking decrease in

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Bucharest, November 17th, 2010

CONTACT DETAILS:

Daniel.Catana@atkearney.com +40 (21) 304 02 20 (Office)

Customer Centricity Instead Of Passenger Handling

Increasing Revenue In The Aviation-Eco-System

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A.T. Kearney 17.11.2010

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Air traffic is shrinking – decrease in revenue even four times higher than in passenger numbers

1) Passenger traffic Source: IATA 09/2009 based on USD); Press releases

  • 3,4
  • 13,4
  • 10

Revenue per Pax Pax Total Revenue

  • Decrease in

revenue per PAX was three times higher than decrease in passenger numbers

  • Decline in

average revenues mainly due to decreasing demand in the Business segment

Development air traffic worldwide(%; 2008-2009)

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A.T. Kearney 17.11.2010

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2,0 1,0 1,5 0,5 3,0 2,5

USA

1,51 0,0

EU27

2,52

Air traffic in EU27 clearly reveals potential for increase

1) EU27 2009; USA 2009 Source: Eurostat, BTS, A.T. Kearney analysis

Flights per capita in comparison

  • Top-rank in Europe

with ca. 3.24 flights per inhabitant is Spain

  • In the U.S.A. people

fly significantly more than in the EU27

2,00

EU27-target mark 2020

Comments

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A.T. Kearney 17.11.2010

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While the number of flights per capita decreased in the EU during the past years, in Romania there was an upward trend

1.5 1.6 1.6 0.0 0.5 1.0 1.5 2.0

2009 2008 2007

  • 3%

0.37 0.37 0.32 0.0 0.5 1.0 1.5

2009 2008 2007

+7%

Flights per inhabitant in EU 27 Flights per inhabitant in Romania In Romania, in 2009, the number of flights per inhabitant was approximately 15% higher than in 2007

Source: Eurostat, A.T. Kearney analysis

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Eastern European air transport: huge upswing potential in comparison to Western Europe

Travel frequency coefficient: PAX per inhabitant 2009

ES GB NL AT PT DE FR IT LV CZ HU BG SI PL SK RO Source: Eurostat, A.T. Kearney analysis

0.36 0.37 0.45 0.70 0.78 0.81 1.20 1.72 1.81 1.82 1.96 2.24 2.63 2.82 3.21 3.24

Romania Slovenia Slovakia Poland Italy UK Spain Latvia France Germany Portugal Austria Holland Czech Republic Hungary Bulgaria

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Among the top-50 service providers in Germany, no transport provider

2009 2008 Best Airport

1. 3. Seoul Incheon 2. 1. Hong Kong 3. 2. Singapore Changi 4. 8. Zurich 5. 5. Munich 6. 6. Kansai 7. 4. Kuala Lumpur 8. 11. Amsterdam 9. 12. Centrair/ Nagoya 10. 20. Auckland

2009 2008 Best Airline 1)

1. 2. Cathay Pacific Airways 2. 1. Singapore Airlines 3. 5. Asiana Airlines 4. 7. Qatar Airways 5. 9. Emirates 6. 3. Qantas 7. 10. Etihad Airways 8. 8. Air New Zealand 9. 6. Malaysia Airlines 10. 4. Thai Airways

1) In parallel an award for Low-Cost Airlines is conducted, where Air Berlin achieved rank 2, followed by easyJet on rank 3 Source: Handelsblatt, University St. Gallen, Skytrax

Extracts from national and international service provider rankings

Competition Germany’s most customer-oriented service providers 2010

Trading companies well ahead

The 50 most customer-oriented service providers in Germany 2009

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The customer does not see the various actors, but his trip – the Aviation-Eco-System

Flight security Distribution systems (GDS), Internet Security check, Check-in, Boarding Ground handling and suppliers

Airline

How much I’d like to… I’d love to… Customer

Holistic approach along the aviation value chain

I want…

Intermodal traffic/feeder

Airport operator

Manufacturer

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Customer centricity leads to an increase in revenue

1 Target group 2 Keeping existing customers 3 Flights/Customer 4 Target revenue/Customer

Current Target Current Target Current Target Current Target

Customers x Customer Life Cycle x Flights/Customer x Additional Revenue/Customer = Revenue

Four levers

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Aviation is still too centered around “handling categories” – Customer centricity means structuring services first

Services

Services included in flight

  • Transport from A to B
  • Seat
  • Catering on board
  • Luggage transport1)
  • Payment methods1)
  • Headset for entertainment1)
  • …

Customer service

Services offered on top of flight

  • Special seat1)
  • (Special) catering on board1)
  • Luggage transport1)
  • Payment methods1)
  • Shopping/Duty free
  • …

Additional service/Assistance

Additional (convenience)

  • fferings to fully absorb

buying power of customers

  • Pick-up and delivery service

to the airport

  • Pick-up and delivery service
  • f luggage
  • Gate entertainment (gym,

massage, catering, destination downloads etc.)

  • Rental cars
  • Hotel offers

Services – Structuring (example: scheduled airline)

Are regarded as product- unbundled through partial calculation, are included in the flight fare Are regarded as an additional

  • ffer and are priced extra

Are regarded as product- bundled through partial calculation and priced extra

(1) Offerings are offered free of charge (service) as well as against payment (customer service) – depending on a philosophy of airline. Source: A.T. Kearney

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Each identified customer needs to be accompanied from door-to-door – Extension of the service offering

Security check Shopping- Duty Free

Boarding/Flight

Check In P

Intermodal traffic

Interactional approach – Tool for identifying new service offerings

Trip purchase

(Check In)

Airport /Departure Airport /Arrival Destination

Pass control Transfer Parking Rail Transit Further

  • fferings

In-flight-service Entertainment Services Transfer Rail Arrival-service Delivery- service Rental car Meeting Reservation Booking

€

Hotel at Home Events

€ € € € € € € € € € € € € € Intermodal traffic

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Every life situation with different needs and willingness to pay – Extension of target groups

Family Life Cycle

Children visiting grandparents or divorced parent Youth/students discovering the world (Young) working couples in long- distance relationships Professionals

  • f different
  • ccupational

groups Parents torn between family and job Best-Ager with time for family and hobbies 1 2 3 4 5 6

Family Life Cycle – Tool for identifying new customer target groups

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Customer centricity perspective could yield a revenue increase of up to € 46bn in the EU27

1) Airlines: Flight revenues and Ancillary revenues, Airports: Non Aviation revenue; GACH region: Germany, Austria, Switzerland Source: A.T. Kearney analysis

Comparison of revenues status quo versus with customer centricity (Airlines, airports in region, Pax-dependent1) 2020, € bn)

  • Traditional growth forecasts of

4-5% p.a. no longer maintainable

  • A.T. Kearney forecast sets

GDP with factor 1.5

  • Customer centricity adds for

the year 2020 a potential for revenue increase up to € 46bn in EU27

  • Without systematic cooperation
  • f airlines and airports a

revenue increase of € 20bn is still attainable in EU27 +46

203 229 183

+20

EU27

Status Quo Customer Centricity Individually Customer Centricity System

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Examples for new offerings – Cooperation of airports and airlines unlocks highest potential

Innovation of cabin facilities or special services on board (e.g. self service, bars, massage) Improvement of the entertainment

  • ffering (chats, pre-ordering of

movies, purchase of music) Self navigation and information on current geographic position and destination (e.g. Google maps) Mobility-Provider to and from as well as at the airport – ranging from terminal navigation, over electric rental cars to Rail&fly Additional services by making use

  • f the location advantage “airport”

(e.g. interviews with VIPs, video conferencing) Service and product offerings on the way to and at the gate – for leisure and business travelers Packages with multiple flights, airport transfers (and events) („Grandma-package“ or mobility card, Europe-opera-sub) 1. Special offerings for frequently traveling non-profit-sector (congress-, „demonstrational“- tourism)

Airports Airlines

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Long-term objective: Real brands also in the aviation business

Innovation potential Willingness to pay Premium-Business LOHAS1) Saving Adventure

Brand positioning in pure form

High High Low Low

(1) LOHA: Lifestyle of Health and Sustainability