In-Flight Destination Services : new airline offers in reaction to travelers’ needs

Travelers’ desires have shifted towards travel that is experience-oriented rather than destination-oriented. Destination Services offers (all the activities and services that a traveller can do or use during his journey) must adapt and propose personalized services and experiences to meet the new needs of travelers. Alcimed has explored this promising market and presents you the opportunities that airlines will be able to seize through the IFE: In-Flight Entertainment System.

Destination services : for new generations who are changing their travel habits

Consumer habits are changing and consumers are looking for more meaning. This paradigm shift has not escaped the world of tourism. Consumers are looking for unforgettable experiences, while wanting flexibility in their commitments. Traveller’s are more sensitive to respect of the environment and the population.

When travellers used to focus on the destination, travel was mainly to mass destinations, with a focus on accommodation. Nowadays, travellers are moving away from mass destinations and giving more importance to the experiences they will have during their journey. This has been verified by the increase in the budget allocated to activities, while at the same time the budget for accommodation has decreased. This change is mainly explained by the arrival of the new generations who consume differently than their elders. Generations Y & Z, are the travellers 2.0 who act as catalysts for these trends.

ourism players must develop their offers to better satisfy the new needs of travellers, particularly those players offering Destination Services. These are categorised into 7 activities and services:

• Accommodation
• Attractions
• Events
• Experiences and activities
• Guided tours
• Shopping
• Transport

These players are shifting from a destination-centric to a traveler-centric approach. As each traveller has specific needs, the players must propose new and highly personalised Destination Services to satisfy their customers.

Partnerships are being formed to better address the difficulties of the Destination Services market. The historical players are faced with new entrants who innovate and are forced to renew themselves. All these aspects bring a significant competitive dynamism to this market

In-Flight destination services : a still immature but promising market

In-Flight Destination Services offers represent all the services available during a trip, which an airline can offer for sale during the flight via IFE.

The In-Flight Destination Services market is benefiting from the dynamism of the Destination Services market, with a business model based on the sale of advertisements on the seat screens. Airlines that have made this choice are in an ideal position in the value chain, as flights are key moments in a trip. Because travellers have few distractions during a flight, airlines have their full attention. If travellers have last-minute booking needs, being able to offer a booking service at this stage of the journey is a real asset.

Nevertheless, the passenger experience should be positive, the advertising should be thought of as entertainment, with a content proposal personalised for each passenger. One way to present an IFE service in a form that does not alter the passenger experience during the flight is through storytelling. For example: on a flight from Atlanta to Rome, a passenger will watch a movie in which he will see the Coliseum, and after the movie he will be offered to visit the monument with the possibility to book his tickets directly on the seat screen.

In-Flight Destination Services: what benefits for airlines?

The offer of In-Flight Destination Services by airlines has several benefits.

1. The first benefit is obviously financial. Airlines will be able to supplement their revenues through In-Flight Destination Services in a few ways. Airlines can, for example, use a commission system on the transactions made (commissions can be as much as 25%), or they can sell screen time in a system similar to advertising.
2. The second benefit for the companies is to build up traveller loyalty. Indeed, it is possible for airlines to differentiate themselves and improve the overall passenger experience by offering exclusive deals during the flight

The emergence of new opportunities can be explained by a paradigm shift in how people travel. This phenomenon is accelerated by the emergence of new generations, with their desire for personalised experiences. This market is particularly interesting for airlines, which occupy a strategic place in the value chain. By offering In-Flight Destination Services to their passengers, airlines will be able to capture additional revenues and differentiate themselves from their competitors, and finally the traveller experience will be improved. At Alcimed, we are convinced that airlines and travellers will no longer be able to do without this type of in-flight service. Let’s investigate together the opportunities that the “Destination Services” market can offer to you.

About the author,

Antoine, Consultant in our Aéronautic-Spatial-Defense’s Team in France