Tony Sit is Senior Vice President and General Manger Asia Pacific for GuestLogix, a leading provider of onboard retail and payment technology solutions to airlines and the passenger travel industry. The company opened its new Asia-Pacific headquarters in Hong Kong last month. Retail in Asia spoke to Sit about the increasing importance of ancillary revenues for airlines nowadays. He also shared his views on the Asian market with RIA.
RIA: For airlines, ancillary revenues includes the selling of a la carte features, commission-based products, frequent flier activities, etc. Can you explain why ancillary revenues are important to airlines in the current global economic climate?
Tony Sit (TS): As competition between airlines is fiercer nowadays, ancillary revenue has become more important to the industry. Competition is no longer only about the equipment in cabin, or the services provided by flight attendants; it is also about how airlines provide personalised services that can prove their knowledge of customers’ needs. Much publicised information has shown that airlines’ ancillary revenues are increasing and becoming more important nowadays. However, it is not only about income, it is also about how to enhance the brand with these extra services, by providing customers with value added, personalised services to build up their loyalty – this is also a part of brand building.
When a passenger, whether he is a business traveller or a leisure traveller, sees something that he wants to purchase in a cabin, he may make his decision and buy the item immediately. This decision might be influenced by the convenience or the privilege offered. The whole purchasing process in-flight can be much faster than in traditional retailing. This is because airlines have unique advantages which traditional retailers don’t have. In traditional retailing, a customer may go into a store without buying anything – the retailer may not know what this particular shopper wants, and he may only be a window shopper. The retailer doesn’t have the ability to put the shopper into a specific scenario, occupying the shopper’s time. However, with its unique format, an airline company will have chances to build a passenger’s loyalty to the brand once he is on board; he does not only have his private time enjoying the in-flight entertainment, dealing with business and documents on his laptop; he can also feel how he is treated differently. Even though he is only one of the three hundred economy passengers, his needs are still to be understood and fulfilled. This will make him feel he is treated differently. Many airlines are now facing the same problem – how to provide personalised services to make the passengers feel the difference and build up brand loyalties? With personalised information and knowledge, airlines will be able to provide what these passengers need, turning these passengers to more loyal customers and changing them from passenger to consumers. This is very important to the airlines’ business.
RIA: GuestLogix last month celebrated the opening of its new Asia-Pacific headquarters in Hong Kong. And we’ve also heard that you recently updated your onboard retailing solution to include some Asian languages such as Chinese, Japanese and Korean. Do these suggest that you see great opportunities in Asia? Where are the opportunities here – for both airlines and GuestLogix business?
TS: We rate the Asia-Pacific market top of our list – it is why we set our regional headquarters here in Hong Kong, one of the world’s busiest passenger travel centres in Asia. We hope to provide airlines with tailor-made online retail solutions. Every airline company hopes to have their own brand identity. With GuestLogix platform and technology, we are able to provide unique solutions for each of them.
Looking closely at the global economic tread, we can easily see which part of the world is growing, and obviously, the economy in the Asia-Pacific region is still developing. However, airlines in Asia are not just "developing"; they are very tech-savvy. They make use of information technology as well as other new technology to cope with the current challenges that they face.
Airline companies will see opportunities across the Asia-Pacific region. But for Hong Kong, as it is backed by its booming motherland China, it will have particular advantages. The market in China is becoming more mature and people in the country accept new technologies quickly; sometimes they accept new innovations even quicker than people from other regions – that’s where the opportunities are.
RIA: What is the challenge for airline companies who want to provide personalised services to their passengers?
TS: In this market, low cost carriers and legacy carriers face different challenges as they have different business patterns. However, all airline companies have to build up their own brands and make their own long-term strategies. Once they have set their long-term strategy, what they need is a technical partner who has a stable and long-term R&D plan, allowing the airline company to develop their services. This is most important.
GuestLogix is an enabler – we create platforms for airlines and give them different ideas to create these personalised services.
RIA: Can you tell us more about GuestLogix’s products and solutions? How do they work in airlines’ retail operation?
TS: GuestLogix onboard retail technology platform helps airlines and travel operators build comprehensive retail solutions throughout the entire travel journey. GuestLogix has brought to life the concept of the Onboard Store – defined as a unique store-type with significantly different characteristics than a regular retail store. These distinctive qualities have been the foundation for the design and development of the travel industry’s most popular onboard retail solution, ensuring that the needs of all stakeholders are met from operator to passenger to content provider and more.
Every store has a defined set of unique characteristics regardless of the retailing environment. Typical store characteristics are; the size of the store, the target audience, the product selection, shelf structure, the check-out process and so on. An Onboard Store holds a wealth of unique characteristics that drive a distinctive set of requirements which in turn form the platform design.
The GuestLogix Onboard Retail Framework is the base upon which all other technologies within the GuestLogix solution are built. It incorporates front-end access through customised, branded POS software that can be accessed by consumers at any travel touchpoint whether through handheld POS devices, IFE systems, Kiosks or consumer devices. The framework also features integrated categories or shelves that allow you to address the needs of the travelling consumer. It also incorporates a full Back Office retail solution that can be accessed by the Store Operator to monitor performance and manage other activities of the Onboard Store. The back end of the Onboard Retail Technology Platform also allows content providers to easily populate the store’s “shelves” with appropriate content.
RIA: Last year, GuestLogix launched Onboard Retail Solution with some Asian airlines such as Hong Kong Airlines and Garuda Indonesia, to power up their in-flight duty free programmes. Can you share these experiences with us? Have you received any feedback from these clients?
TS: We’ve heard some very positive feedback from our clients and their partners who have experienced our system. We have knowledge about the different requirements between different types of clients; we understand every client’s need, whether it is a full legacy carrier, flag carrier, or low costs airline – some airlines would have many transactions which involve small amounts, while others would have only a few transactions in huge amounts – as our solution is highly flexible, we can adjust and customise it to fulfil our clients’ needs.
RIA: What is your next step in Asia?
TS: We understand that in the Asia-Pacific region, our clients need customised services and solutions, therefore, our office in Hong Kong will focus on developing local infrastructure, which enables us to cater to our clients’ needs. In other words, it means all solutions for our Asia-Pacific clients will be deployed locally from our regional team.
At the same time, we plan to open three to four branch offices in Asia, including locations such as China, Singapore and Australia. We hope our teams are close to our clients, putting ourselves into our clients’ shoes, understanding their needs.
RIA: What are the biggest segments in onboard concessionaries – in the Asia-Pacific region and the world?
TS: If you flip though an in-flight magazine, you will find the most popular products are cosmetics, watches, wines, cigarettes, etc. These are the biggest segments currently. However, a new trend of selling various types of services is growing. Imagine yourself as a traveller; will it be an advantage for you to get a ticket for an attraction at your destination ahead of your arrival? How about getting theme park tickets for the whole family on-board? This is very convenient for passengers. If the airline companies know what type of services their passengers need, they could be very successful. Different regions around the world will have different trends and cultures, but for Asian customers, with their strong buying power, they would appreciate it if you could provide services and products that fit with their culture and needs. This will make them feel they are being treated as individuals and help them to see your services and products as worth the money.
RIA: What will the future of onboard retail look like?
TS: In the near future, we will probably see a few new trends. According to our research, we find that passengers’ shopping desire will increase, if they can use their personal devices onboard as a shopping channel. Therefore, we are developing new platforms at the moment, allowing passengers to use their own mobile devices such as tablets, iPads, smartphones etc as a device for shopping in-flight.
The second trend is about how to enhance the in-flight personal TV. Nowadays, many airline companies have already installed personal TVs throughout the whole flight, whether it is first class, business class or economy class. How can we transform the personal TV into a device that the passengers can control, increasing the chance for them to purchase? This is another trend that we will see in the Asia-Pacific region.
Apart from these, we will see new trend for the premium economy class and we have to think about how we can customise the services for this new group of passengers. Their expectations may not be as high as those from the first class, but they would be delighted if they are treated slightly different. "Treat me as an individual, a real person, rather than just a seat number." That’s what we need to think about for the future.
GuestLogix Inc., the leading global provider of onboard store technology and merchandising solutions, helps airlines and other travel operators create, manage, and control onboard retail environments tailored to their needs and their passengers. GuestLogix brings a decade of expertise as a trusted onboard transaction processing partner to airlines around the world. The Company’s global headquarters and centre for product innovation is located in Toronto, Canada with regional head offices located in Dallas, Texas (serving Americas) London, UK (serving EMEA), and Hong Kong (serving Asia Pacific). A sales and support office is located in Singapore. Logistics centres are situated in Toronto, Dallas, London and Seoul with a software development centre located in India. More information is available at www.guestlogix.com
Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.