Winter 20/21 – Part Two – What can be done to ensure Caribbean aviation is economically sustainable?

Aviation pricing and revenue generation expert, Oliver Ranson, writes:

Stingray City – that sounds cool. Of the top 15 Caribbean attractions listed on Trip Advisor today, that’s the one I will visit first in 2021. But it will not just be Stingray City enjoying my custom, an entire travel ecosystem involving my hotel, dinner restaurant & airport taxi driver will earn money from my visit. But sadly the airline who enables it all will make little profit, perhaps even a loss.

With high costs & fierce competition, airlines are notoriously hard to make profitable. But without airlines the rest of the Caribbean tourism sector cannot thrive. Countries that solve this problem will be best-placed post-Covid & will need to combine three ingredients in a recipe for success.

Apply revenue management rather than reducing fares Travel demand was decimated in 2020 & over a period flying empty seats, airlines will be tempted to cut fares. They will need to judge carefully whether discounting stimulates extra passenger sales or simply dilutes revenue from those flying anyway.

Fortunately every airline has revenue management available as a solution. Leaving fares the same but increasing the number of seats available at lower prices will reduce the burden on passengers while carriers still receive acceptable prices. Airlines will see where & when demand can be stimulated. Such revenue experiments will help Caribbean carriers take better capacity management & pricing decisions.

Use existing technology to monetise the travel ecosystem Like in all industries, airline managers refer to a baffling range of acronyms. Among these is so-called NDC, New Distribution Capability. Rarely explained & generally poorly understood, NDC is nevertheless a potential goldmine for Caribbean carriers.

NDC is not a new system or process but rather a technical standard bolted on to existing infrastructure that allows airlines to act as retailers, selling almost any product or service. There will be a great opportunity for airlines to market attractions like Stingray City & collect a few Dollars from everything a passenger does after their flight. A Dollar or two per meal, bar visit, hotel night & experience are small individually but can all add up to more economically sustainable Caribbean airlines.

Even better, there need not be any cost to local tourism business, who will be paying standardised commissions to their local airline instead of overseas travel agents.

Consider galleys & airports as revenue generating spaces A plane’s galley or an airport’s check-in counter are traditionally costly for airlines, places to cut back. But when the airline is using NDC to retail travel products & services they become investable profit centres instead. Such an approach will grow airline jobs, boost visits to attractions like Stingray City & ensure the long-term sustainability of local airlines, a true win-win situation.


Call to Action

Getting all the above right is not difficult, but does require some effort. The Caribbean Council is collaborating with Airline Transformation Department, a group of airline & airport experts. They are ready to help Caribbean carriers thrive. Are you? Write to chris.bennett@caribbean-council.org or oliver@ransonpricing.com to make it happen.

#caribbeancouncil #caribbeanbusiness #caribbean

About the Author

Oliver Ranson is not just an airline revenue generation, quantitative branding and data science expert, he is also a regular passenger taking 100+ flights a year. Inspired by the glamorous style of ocean liners and airships he believes that airlines don’t just sell travel, they sell a lifestyle. As Managing Partner of Airline Transformation Department, he has worked with airlines, suppliers, aircraft manufacturers and travel technology companies around the world, growing industry revenue by more than one billion Dollars.

Facebook
Twitter
LinkedIn