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“BEYONDANCILLARYREVENUES”
The Rise of New Mobile
Infotainment Services
Pieter K. Zylstra, Head of Strategic Programs, SITA AsiaPac
Terrapinn 2014 World Low Cost Airlines Conference, Singapore, Feb.18-19, 2014
2 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
Aviation: Where is the money?
Source: IATA, 2013 (based upon report McKinsey & Company).
Outlook 2014 Profit Margin: 2.6%
Source: IATA, IdeaWorks 2013, CAPA 2012
How can Aviation TransportationBusiness Model survive?
ATI profitmargins
trans
port
“Razor-thin”Margins:1%-5%
1st wave:Transportationbusiness model
“Healthy”Margins:10%-20%
anci
llary
2nd wave:Non-Transportbusiness model
Time
Rise of Ancillary Revenues
Source: IdeaWorks, Oct.2013, LCC websites
“Third Wave”: Mobile InfotainmentATI profitmargins
trans
port
“Razor-thin”Margins:1%-5%
1st wave:Transportationbusiness model
“Healthy”Margins:10%-20%
anci
llary
2nd wave:Non-Transportbusiness model
Timein
fota
inm
ent
“Fat”Margins:
>25%
3rd wave:Infotainmentbusiness model
“intelligent transportation”“”transportation”
today
8 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
Beyond Ancillary Revenues…
in the coming years allyour passengers will becarrying smartphone &tablets into the plane.
personal communication devices are approved by more and more aviation
authorities worldwide
Next generation (Ka)satellite technologies
offer high-speedbandwidth
Do you want to knowyour passenger?
Rail versus Airlines…
11 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
How can LCCs create PersonalProfitable Services?
personal: invest in agile PSS functionality
services: integrated architecture with “big
data” capabilities
profitable: invest in“touchpoint” solutions& capture experiences
13 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
14 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
SITA’s Crewtablet solutionPassenger List
Inventory
Forms & reports
Slow paper based reporting
Admin overhead Heavy weight &
fuel consumptions No pax service
personalization
Crewtablet movie
15 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
Fully managed solution, opex-based
Crew App
Crew Server
Integration
Reservation & TicketingRoster, Duty free, LoyaltyMobile Learning, MRO, BagPayment Service Providers
Business Process efficiency
New revenues
Passenger Services
Crew Portal
Paperless operations
1
23
4
16 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
Module-based solution
2013 20142014
Analytics
Portal
Core
Pax
Crew
Bag Track
Retail
Defects
Bus Intel.
M-learning
Live Sces
Inventory
17 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
ROI-based solution
CREWTABLET PAX
COSTREDUCTION
CUSTOMERSATISFACTION
CUSTOMERREVENUE
RETAILOptimize passenger
experience@ plane (by crew)
Increase passengers loyalty(frequent flyer program &
affiliate program)
Enrich passenger profile(especially VIP-program)
Automate digital claim process@ plane / back-office
Turn passenger loyalty intocross/upselling revenues
DIGITALPASSENGER
PROFILEReduce delay “no show”
STRENGTHENCOMPETITIVEPOSITIONING
SOLUTIONSTRATEGIC
GOALSMODULEOPERATIONAL
EFFECT(S)SERVICE
FUNCTIONALITY
DIGITALPASSENGER
SURVEYS
CREW
BAG
OTHER
CrewTabletfunctionality
CrewTabletfinancials
COSTS CUSTOMER COMPETITIONCOMPLIANCY
3
4
1
2
PAXCREWCORE BAG
RETAILCABINDEFECT E-LEARNING
MEALSLIVE
SERVICES
TBD
1 Process & issues 2 Mapping modules
3 ROI Benefits logic
Negative ROI
crewtabletfunctionality
crewtabletfinancials marginal
revenueper user
Marginal costsper user
PositiveROI
4 ROI Business Case
18 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
Our vision on the “third wave”:
shared wireless infra & platform:
• focus upon enterprise mobility cost-savings
• launch personal profitable passenger services
Examples the “third wave”:mobile personal digital services
Crew (operational efficiencies
& service personalization) Pilots (EFB, Fuel, Safety, etc)Maintenance (remote MRO,
Smart diagnostics)
Connectivity(Internet & GSM)
Landing PageDigital MagazineOn board retail
Digital Audio/Video(Live / On Demand)
“E-Connected Aircraft”(B2C, B2E, B2B & M2M)
OnAir Play: Entertainment on PEDs
➔ Favourite amenities when flying:
© OnAir 2013 21
Other
None
Shop online
Social media
Online work
Text messages
Semd email
Take pictures
Connect to Wi-Fi
Read emails
Offline work
Watch movies
Read books or mag
Play Games
Listen Music
2%
4%
7%
18%
19%
23%
23%
24%
30%
31%
39%
44%
48%
54%
68%
Source: 2013 Airline Passenger Experience Association (APEX) and Consumer Electronics Association (CEA®).
Specific Usage of PEDs During Flight
Examples “third wave”:mobile personal digital services
How can SITA support?Our 4-Step Approach
Roll-outProgram Management Office
Year 1 Year 2
Transformation Roll-out
…
PhysicalInfrastructure Deployment +Network Integration
ApplicationCustomization& SystemIntegration
OrganizationTransformation(incl. processes)
Awareness session of “best ATI practices” & demonstration SITA solutions (ATI apps).
What is your position in the value chain?=Strategic Deployment Options
How would the preferred innovation roadmap look like?=Integrated Service Roadmap
What integrated architecture should support the roadmap?=High Level Architecture
How does the business case look like? = Benefit Logic
How to deploy the innovation roadmap? = Governance Advice.
1-3 Days
Insight Day –Master class
!!
!!
!!
6-12 Months
Testbed (early deployment)
Governance
Transformation
@IT / Corporate Management
Product Management
Roadmap Introduction
Service Organization(& Processes)
Network InfrastructureApplicationsMiddleware Platform
@back-office@site
Physical Infrastructure@sites
ArchitectureLogical components
Back-office architecture
Middleware platform
On site infrastructure
ServicesInnovation Roadmap:Public ServicesEnterprise ServicesM2M Services
PropositionValue Chain AnalysisStakeholder AnalysisGovernance & ControlDeployment Scenarios
Business CaseBenefit Logic
Business Case
Investment Requirements
Capex/Opex-financing
Strategy & Business Case
3-6 Months
24 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
Contents
25 | World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014
Thank you for your interest!
Questions?
Contact details: