http://www.tnooz.com/2011/05/19/news/delta-air-lines-seeks-to-become-less-pushy-on-fees/
Delta Air Lines seeks to become less pushy on fees
Posted by Dennis Schaal on 19 May 2011
Delta Air Lines sees an annual $1 billion revenue opportunity in ancillary services such as*Economy Comfort seats and Sky Priority services, and the carrier wants to become less pushy about fees.
That’s the direction of Delta’s merchandising strategy, as outlined [audio webcast]*today by its president, Edward Bastian, at the Bank of America Merrill Lynch Global Transportation Conference.
“Our merchandising strategy within Delta needs to evolve from what I would call a push approach where we force fees in a one size fits all on our customer base to more of a pull strategy where we give customers the opportunity to purchase what they value,” Bastian said. “We see this as a $1 billion opportunity which should be up and running, all-in, by 2013.”
So, Delta sees less force-feeding of fees, and more Comfort Seats, Wi-Fi and SkyClub passes in its future. But, where the balance lies, remains to be seen.
This is an important transformation by a U.S. major carrier, which has been a leader in charging for bag fees and the like. A transition to fees that truly are optional could go a long way toward easing consumer angst over the airlines’ fee-frenzy.
Bastian said technology execution and a new ecommerce platform, which will be fully rolled out over the next 18 months, will be key to hitting the $1 billion target.
Even in 2011, new revenue streams for Delta are expected to deliver $150 million to $200 million in incremental revenue, the airline says.
In fact, the recently launched Economy Comfort seats have been reaping about $500,000 in incremental revenue per day, Bastian said.
Delta has been introducing all kinds of new ecommerce products, from a*Facebook booking engine and Facebook check-ins to baggage tracking.
The product rollouts have been a factor in Delta.com now accounting for 40% of the airline’s bookings in North America.
Bastian said Delta.com is the airline’s lowest-cost channel.