Studio Project 6 Boeing and LiveWell Ancillary Revenue Studio Project 6 Boeing and LiveWell

A brief history of the evolution of the airline service model

Game Changer #1 President Roosevelt cancels the US airmail contracts and gives it to the Army (Air Mail Act of 1934) Airlines turn to passengers as source of revenue for airlines

Service was personalized

Game Changer #2 Deregulation happens in 1978 Market opens up to many more passengers Price competitiveness and service are the big differentiators

A new world for the airlines Prices fluctuate Airlines try to entice through service

Game Changer #3 Fuel Price constant rise New business models Hedging bets on fuel and stocking up Examples: Delta has Premium Economy seats, and I think United has it, too. You pay a little more for more leg room Southwest – bags fly free (knowing that they could be brining in money and yet they hold true to their brand)

This should be familiar

Game Changer #4 Internet Mobile devices Ala Cart Mode Loyalty Programs Boomers have seen as a take away (food, leg room, “luxury”, free checked bags, alcohol). All the take aways make Boomers resentful of the airlines.

What is Ancillary Revenue? This is any other way an airline makes money beyond seats (airline tickets).

Target Audience Boomer generation Services and needs for this segment during travel

Today: Ancillary Revenue for Airlines For Purchase food space (seat) ear buds alcohol Credit card collaborations Charge for Wifi access Limited wifi; charge for entertainment Baggage fees

Please, no… Bad examples of what airlines have thought about: Ryan Air: Charging for the use of lavatory Standing room only Mass marketing on every surface of airplane

The big question "What ancillary revenue or feature on the airplane could you image for the boomer passenger segment that makes money for the airlines and improves the travel experience?" What if you had the opportunity to start your own airline. How would you make money? How would you entice more passengers to take their flights? What would an airline/airplane look like that catered to the Boomers? And what would the airlines charge for those things?