Airlines often have a tough time with an inconvenient yet necessary aspect of running their businesses — quickly moving passengers between flights. Whether airlines face bad weather, oversell a flight or find additional revenue opportunities at a higher yield, it’s not always easy rebooking passengers. The impetus to change seats can be strong for passengers as well, particularly when airlines have to switch from a larger aircraft to a smaller aircraft with less seats due to irregular operations.
Companies such as Volantio seek to ease the process by allowing airlines to reach out to passengers ahead of their flights and make them offers. The idea is to get away from the hassle of the gate auctioning process, which may lead to a bad customer experience. Additionally, it’s simply tough on the airline’s front-end staff.
“The job of a gate agent should be to ensure that a flight goes out on time and safely,” Volantio CEO Azim Barodawala told PYMNTS.com in an interview. “They’re not pricing specialists and they’re not negotiating specialists.”
In order to start the rebooking process, airlines tell Volantio how many seats they need freed up. Volantio, in turn, uses its technology to find potential volunteers and reach out to them. The communication with a consumer, for instance, could be a text message with alternative flight choices, along with voucher amounts for each option. In turn, the customer’s response can be simple as typing four characters. The first character is an option designated by a number, and the last three characters make up the word “YES.”
For example, an airline could provide “option 1,” asking the customer to move to the 3 p.m. flight for a $120 voucher. In order to rebook on that flight, customers would reply to Volantio with “1” and confirm with the word “YES.”
The Most Flexible Passengers
In terms of trends, Barodawala has discovered some interesting patterns through the software. Research, for example, has shown that the number of passengers on an actual booking can help determine if a passenger is likely willing to switch. Of all the possibilities, two-passenger bookings tend to be more flexible than any other number of passengers on a single booking. “That factor alone tended to predict more strongly whether or not a person would accept an offer,” Barodawala said.
Beyond that factor, the platform knows if a passenger has accepted an offer in the past. That information may be used differently by different airlines: Some airlines, for example, will extend an offer to those customers. On the other hand, some airlines might not want to extend that customer an offer — they don’t want consumers to get used to those offers. Although, Barodawala said the company won’t share data between airlines. Either way, airlines can use the software to direct people to lower capacity flights by offering them more money for a one flight over another.
To reward customers for making a change, Volantio supports different upgrades. The company, for example, has facilitated one-class cabin upgrades, which, according to Barodawala, have been incredibly successful, even on short flights. The reason is that the perceived value of an upgrade is much higher in the eyes of consumer — even more than a high-value voucher. In addition, Volantio has seen other incentives offered on the platform such as a frequent flier miles or even ancillary products — a low-cost carrier, for example, may offer food on the plane.
Either way, Barodawala said that incentives are critical, and people would not make the changes without them. But, most importantly, “you want to give [passengers] predictability in the sense of being able tell them far enough in advance so that they can actually plan.”
Beyond airlines, Barodawala said that such technology could also be applied to cruise lines. That vertical is a particularly interesting industry, and it has a long booking window of 18 months, so there is a lot of fluctuation in terms of the pricing and variability over time. He also said that the industry has a higher operating margin than airlines do.
Barodawala sees other opportunities in areas such as sea cargo. Overall, Barodawala said that there are many players seeking to maximize revenue and capacity before booking, but then comes the challenge of maximizing revenue after booking. Bookings are, in fact, illiquid assets and there isn’t transferability for a ticket once its sold. But companies such as Volantio inject liquidity and flexibility, while helping airlines — and potentially other industries — maximize their bookings.