Spring Airlines, China’s first low cost airline, is deploying an onboard retail technology platform across the entire fleet, setting a new trend in air travel.
Like most airlines, Spring has been selling food and beverage as well as duty-free items onboard. However, they are also looking to expand their merchandising program and look at things such as destination-based products to passengers such as local entertainment and attraction vouchers. They would also like to use an analytics platform to manage their entire business, which will help them optimize inventory counts, sales performance and all of the various areas of the business any retailer would require.
Under a multi-year agreement signed with GuestLogix Inc., a global provider of onboard store technology and merchandising solutions, Spring would not only be able to do all of the these, but would also be able to accept credit cards onboard and create greater efficiencies for the crew.
GuestLogix’ onboard retail platform and PCI-compliant handheld POS devices will be implemented on all of Spring’s 60 domestic and international routes to accept major credit cards for the purchase of food and beverage, duty-free and destination activity products. The company’s OnTouch Analytics platform will also be utilized to optimize the airline’s onboard retail performance.
David Leitch, SVP & GM, Asia-Pacific, GuestLogix, said the company will be deploying its entire back office management solution that will allow Spring Airlines to manage their products and promotions within their offices,
"Since its inception, Spring Airlines has placed emphasis on innovation, safety and efficiency, in addition to providing our customers with the best-value airfares in China," disclosed Zhang Xiaolu, GM of Ancillary Revenue Department, Spring Airlines. "In an effort to execute a profitable Buy on Board program that benefits both Spring Airlines and our passengers, we have decided to partner with the experts in onboard retail technology. We are confident that our combined knowledge and expertise will lead to enhanced customer service and improved performance results."
Established in 2004, Spring Airlines continues to expand its international presence and is a known trend-setter within the industry having pioneered direct Internet and mobile sales in China, with fares sold mainly via the Spring Airlines website. Its annual passenger volume now exceeds nine million and is famous for its differentiated services and innovation capability, including having introduced the first onboard store business model in China.
In an email interview with Retail Tech Innovation, Leitch discussed in detail the concept of onboard retailing and its prospects in Asia-Pacific.
RetailTech Innovation (RTI): What is your outlook for onboard retailing in Asia-Pacific?
David Leitch (DL): Onboard Retailing has just started to take off in Asia-Pacific. Both North America and Europe have been advanced in their creation of onboard retail programs and have done a lot to try selling various products in-flight. As Asian carriers have been more reluctant to unbundling services, they have relied almost wholly on duty-free programs onboard.
That said, they currently have the strongest performers for in-flight duty-free throughout the travel industry. Low cost carriers in the region are now starting to excel in putting together robust retail programs onboard and while legacy carriers will likely stay to their all-inclusive model onboard, we are now working with many carriers to offer product and service offerings that are a bit outside the box. You don’t need to sell food and beverages to be highly successful in onboard retailing, and the outlook for Asia-Pacific is very strong in the near-term.
RTI: Based on your experience serving global airlines, what are the main challenges of operating an onboard store?
DL: We have deployed our technology across over 70 travel operators and at the end of the day, the challenge always comes down to payments. Other service providers that have tried to enter the market believe it’s all about a fancy user interface or have slick POS hardware – and there is no question that is all important in its own right.
But through our years, it is the processing of transactions in an ever-changing payment environment that is the largest and most often overlooked hurdle. With the swell of air-to-ground connectivity, new payment types such as NFC, a variety of access points such as seatback screens or a passenger’s own device – it is the compliant processing of payment that is always the biggest hurdle. We have been fortunate enough to have such a diverse client base that our experience enables us to handle payments in Australia, New Zealand, Indonesia, India, Hong Kong, mainland China, even Fiji.
RTI: What are the technology solutions you offer to airlines to help them with their retail programs?
DL: One of our differentiators is that we are a full, end-to-end solution provider and although most of our clients use our technology for their entire onboard retail solution, we are in constant talks with travel operators that are just looking for a flexible payment gateway to integrate with, or just need a true business intelligence tool designed specifically for ancillary revenue analytics.
No two carriers are the same, so though we are a product company, we are able to tailor our platform components to make the ideal solution that speaks to the exact requirements of any airline around the world. So everything from Warehouse Management through to Payment Processing and Reconciliation and Analytics, we’re able to support the entire retail cycle.
RTI: How important is analytics in onboard retail?
DL: Analytics is the key behind any retail operation. To this point, there wasn’t a sophisticated business intelligence tool that was able to speak to the actual key performance indicators measured by travel operators. Airlines were reduced to either pulling reports and have a team of people sift through numbers to try to make sense of their retail operation or use a generic retail analytics tool that didn’t relate to the nuances of the travel industry.
Reporting has always been a key part of our solution, but we saw that our clients needed much more than just a canned report on how they did on a certain flight or with a certain product. Last year we launched our Analytics tool and its impact on those clients that are users of the system has superseded even our expectations.
Their ability to run their operation in a proactive manner with real-time data that is structured in a way that gives immediate visualization over business problems such as how a certain flight leg that has been lagging in performance compares against the previous week, month or year and drill into the product mix for each of those instances makes these mass transportation companies real retailers – and it’s pretty exciting!
CEO Talking Shop is the Retail in Asia section devoted to interviews with brand CEOs and retail industry leaders.