Airlines risk creating a new layer of complexity as they expand their retail strategy beyond flights into hotels, attractions and other third-party products, according to a new whitepaper commissioned by payment processor Accelya.
The report, titled Delivering What You Sell, argues that while much of the industry's attention has been focused on how airlines sell products, the next challenge will be ensuring they can deliver them.
Authored by Oliver Ranson, the paper suggests fulfilment could emerge as one of the biggest competitive differentiators in airline retailing as carriers seek to build broader travel offers encompassing hotels, rail services, airport products, dining reservations and destination experiences.
"Airlines have spent years talking about Offer, Order and retail transformation," the report states. "Delivery is the point at which the retail promise becomes real for the customer."
The warning comes as airlines face growing pressure to diversify revenues beyond ticket sales and increase ancillary income.
More products, more risk
The paper argues that expanding into non-air products may generate new commission opportunities and strengthen customer loyalty, but it also exposes airlines to risks traditionally carried by online travel agencies and other intermediaries.
If a flight operates normally but a hotel booking fails, a restaurant reservation is unavailable or a destination activity is cancelled, customers are likely to look to the airline for a solution regardless of where responsibility ultimately lies.
That means airlines will require new policies governing refunds, customer complaints, supplier performance and liability management, the report says.
One challenge highlighted by the paper is verification. Airlines may be required to determine whether a customer genuinely failed to receive a service, whether a supplier delivered something different from what was promised, and who should bear the resulting cost.
The report argues airlines that successfully combine retailing, payment and fulfilment capabilities will be best positioned to grow customer lifetime value.
