U.S. Airlines Eye Foreign Carriers' Success at Selling

Ryanair's $326 million from non-traditional sources in the last fiscal year represented 16% of its revenue, and nearly matched its annual profit.


Ryanair, the maverick European discount airline, will do nearly anything to generate extra revenue. It rents apartments, peddles insurance, sells lotto cards and puts advertising on its planes and air-sickness bags.

"We will brazenly sell you anything -- before your flight, during your flight and even after your flight," says spokesman Peter Sherrard.

The success of Ryanair and other European and Asian carriers in selling goods and services unrelated to transportation has caught the attention of many in the U.S. aviation industry, where carriers as a group this year are eking out their first slim profit in six years.

Although none of the U.S. carriers are embracing the trend as enthusiastically as Ryanair, Fort Worth-based American Airlines, Houston-based Continental Airlines and New York-based discounter JetBlue are among the U.S. carriers attempting to maximize their non-ticket revenue.

"As fuel prices rise, we look for more ways to generate revenue," says Kim Ruvolo, brand manager of JetBlue, which sells many items, including clothing, skin care products, coffee mugs and golf balls, on its website. "Our door isn't closed on anything."

Ryanair and United Kingdom-based EasyJet say the fierce competition that keeps their fares low requires them to sell non-travel items to stay profitable and to fuel growth.

Ryanair paints some planes with another company's name and logo, and some overhead luggage bins are emblazoned with ads. The airline, which flies to 127 cities and carries 42 million passengers annually, is putting ads on every tray table on every plane. Flight attendants announce to passengers what's for sale.

Ryanair's website, which sells 98% of the airline's tickets, hawks all kinds of products. Rentals of apartments, hostels, autos and hotels, as well as insurance, airport parking spaces and travel and ski packages, are displayed on the home page, Ryanair.com.

Ryanair adheres to no marketing model when selling products other than airline seats, Sherrard says. "We don't have much time for textbooks," he says. "We have a very straightforward approach: Get on and sell. The only research we do is: 'Have you paid?'"

EasyJet spokeswoman Samantha Day says U.S. airlines are missing out. "There's a great deal of potential in not just straightforward sales but in smart thinking. Airlines need to think what the consumer needs and wants."

Aboard its flights, EasyJet, which flies 122 jets to 74 cities, sells food, drinks, perfumes, toiletries, sunglasses, pens, cufflinks and lotto tickets.

On the ground, it sells airport parking spaces and airport bus tickets, and rents hotel rooms, cars and apartments.

Results have been impressive. Ryanair's $326 million from non-traditional sources in the last fiscal year represented 16% of its revenue, and nearly matched its annual profit. And the money EasyJet made last year from sales of items other than airline seats exceeded its profit: $165 million vs. $126 million.

Got customers cornered

Marketing experts say airlines have a golden sales opportunity because they have a captive in-flight audience and websites that draw lots of viewers. There may be much more that airlines can sell, they say.

"Airlines should expand their view of what they are offering," says David Aaker, a brand strategy expert and a former professor of marketing at the University of California, Berkeley.

At an annual meeting of discount airlines last month in London, many foreign carriers discussed strategies to boost non-ticket sales.

Diono Nurjadin, president of Indonesia's Mandala Airlines, said the carrier aims to increase non-ticket sales 30% in the next three years.

Tony Davis, CEO of Singapore's Tiger Airways, which sells jewelry, cosmetics and many other items in-flight, said airlines should take note of movie theaters, because they bring in more revenue from popcorn and soft drinks than from ticket sales.

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