How Network Carriers Are Leveraging Ancillary Services To Redefine The Travel Experience
Network carriers are taking off in exciting new directions with the strategic use of ancillary services, as revealed by our Top 50 Airlines Travel Insurance Benchmark 2024 study. These services offer travelers options to enhance their journey, from comprehensive travel insurance to luxury add-ons. Not only do these ancillary services foster customer loyalty, they also define the overall travel experience.
In this article, we explore how leading network carriers leverage ancillary services and forge travel insurance partnerships to provide a seamless travel experience.
Competition and fluctuating fuel prices drive network carriers to seek new revenue sources. Ancillary services have become a cornerstone of this strategy, offering passengers a range of options to enhance their travel experience.
Traditionally, network carriers primarily focused on core offerings such as flights and baggage allowance. However, the industry is experiencing a notable shift towards providing additional services that cater to diverse passenger needs and preferences. These ancillary services can be broadly categorized into three main categories:
By offering these services, network carriers enhance customer satisfaction, foster loyalty, and generate additional revenue streams to support their core operations.
Ancillary services play a crucial role in the revenue strategies of both network carriers and low-cost carriers (LCCs). While both types of airlines offer ancillary services, there are notable differences in their approach and offerings.
Network carriers typically offer more extensive onboard services compared to low-cost carriers. This includes complimentary meals and beverages, in-flight entertainment, and Wi-Fi. While some low-cost carriers offer these services for purchase, they are often more limited compared to network carriers.
This difference in onboard services reflects the target market and positioning of each type of carrier, with network carriers catering to passengers looking for a more premium travel experience and low-cost carriers focusing on budget-conscious travelers.
Network carriers often have more robust frequent flyer programs compared to low-cost carriers. These programs offer additional benefits such as priority boarding, lounge access, and free upgrades.
While some low-cost carriers have loyalty programs, they are typically less extensive compared to those offered by network carriers. This difference in loyalty programs reflects the overall focus on customer retention and repeat business within the network carrier segment.
When it comes to in-path travel insurance offerings, network carriers and low-cost carriers also differ in their approach. Network carriers often partner with insurance providers to offer comprehensive travel insurance packages as part of the booking process. These packages typically include coverage for trip cancellations, medical emergencies, and other travel-related issues.
In contrast, low-cost carriers may offer more basic travel insurance options or partner with insurance providers to offer insurance as an add-on during the booking process. This difference in approach reflects the overall focus on providing a seamless travel experience for passengers within the network carrier segment, while low-cost carriers may prioritize cost-effectiveness and simplicity in their ancillary offerings.
After examining the differences in ancillary services between network carriers and low-cost carriers, let’s shift our focus to specific examples of how leading network carriers are leveraging these services.
Drawing insights from our latest study, here are seven prominent network carriers that use ancillary services and in-path travel insurance to enhance the travel experience, ensuring a smoother and more secure journey for their passengers.
Qantas sets the bar high with its ancillary offerings, including additional baggage, seat selection, and vehicle rentals. In partnership with AIG, they offer a white-label solution that caters to diverse needs. This insurance includes unlimited cover for overseas medical and hospital expenses, including COVID-19 diagnosis, as well as non-refundable trip cancellation costs. What sets Qantas’ travel insurance apart is its integration of a rewards program, allowing travelers to earn Qantas Points with every policy purchase, adding value and incentives for passengers.
Lufthansa’s ancillary services extend beyond the immediate flight experience, encompassing baggage, seat selection, and even the innovative “Lufthansa Sleeper’s Row” option. In addition, travelers also have the option to book an empty adjacent seat row for ultimate comfort.
Their commitment to a seamless travel journey extends to their in-path travel insurance offered with AIG. This insurance incorporates COVID-19 quarantine compensation abroad, emergency support before departure, and baggage protection, providing a safety net for unforeseen circumstances.
Qatar Airways embodies luxury travel, and their ancillary services reflect this focus. Passengers can indulge in the comfort of their premium lounges, avail meet and assist services for a smooth arrival, and select their preferred seats for optimal comfort.
Their in-path travel insurance, co-created with AIG, seamlessly integrates with this luxurious experience. The insurance covers COVID-19 medical expenses, travel/baggage delays, and offers 24/7 global assistance, ensuring passengers feel secure throughout their journey.
Emirates emphasizes a seamless travel experience through its ancillary services, providing benefits like excess baggage allowance, seat selection, and flight upgrades for enhanced comfort. Their collaboration with AIG extends this commitment through comprehensive travel insurance, safeguarding passengers against trip interruptions or cancellations, delays, and lost or stolen baggage.
Turkish Airlines offers ancillary services such as extra baggage, sports equipment carriage, and pet travel options, specifically targeting travelers who greatly prioritize convenience. Their focus on value extends to their in-path travel insurance offered by Cover Genius. This insurance stands out with its coverage for cancellations due to COVID-19 and other illnesses, medical expenses, emergency medical and dental treatment costs (for international flights), and flight delay expenses, providing comprehensive protection at an attractive price point.
jetBlue is known for its innovative approach, and their ancillary services reflect this. Passengers enjoy features like refundability, free same-day switches, and priority security for added convenience. Their white-label travel insurance, provided by Allianz, aligns with this focus on flexibility and peace of mind. The insurance covers trip cancellation and interruption, offers compensation for lost, stolen, or damaged belongings, reimburses for unexpected expenses due to delays, and provides 24/7 assistance in case of emergencies, ensuring a worry-free travel experience.
Air Canada elevates the travel experience with its ancillary services, including seat selection, upgrade options, and carbon offsetting for environmentally conscious travelers. In partnership with Allianz, their white label insurance provides comprehensive coverage for trip cancellation and interruption, emergency medical care, baggage loss/delay, and even medical coverage for COVID-19, ensuring their passengers are protected at every touchpoint.
The network carriers’ embrace of ancillary offerings, particularly travel insurance, presents a unique and multifaceted landscape for travel insurers. These airline use cases offer valuable insights for travel insurers seeking to navigate the evolving market and maximize their reach.
Here are some key implications to consider:
Airlines are increasingly seeking partnerships with travel insurers to offer white-label solutions tailored to their specific brand and target audience. This presents a win-win situation: airlines can enhance their ancillary offerings and tap into new revenue streams, while insurers gain access to a wider customer base and leverage airline branding. Explore opportunities for collaboration, be it developing customized insurance plans, co-branding initiatives, or joint marketing campaigns.
In a crowded market, standing out is crucial. Consider offering unique coverage options like Cancel For Any Reason (CFAR) or COVID-specific protection that address emerging travel concerns. Explore niche offerings catering to specific demographics or travel styles, such as adventure travel insurance or senior-focused plans. Remember, innovation attracts attention and positions your brand as a leader in the market.
Travelers today expect a smooth and frictionless experience. Ensure your insurance seamlessly integrates into the airline’s booking process. This could involve pre-populated forms, automated quotes, and easy claim submission options directly through the airline platform. A seamless experience fosters trust and encourages travelers to opt for insurance during the booking process itself.
Network carriers cater to a wide range of travelers, from budget-conscious adventurers to premium luxury seekers. Recognize this diversity and offer a variety of coverage options at different price points. This ensures accessibility for all traveler types and allows you to capture a wider market share.
The travel industry is constantly evolving, and so should your approach. Stay informed about emerging trends, such as the growing demand for sustainable travel insurance or the increasing use of telemedicine in travel assistance. By being proactive and adapting your offerings to the changing landscape, you can ensure your place in the sky-high future of network carrier ancillary revenue.
Remember, the key to success lies in understanding the needs of both network carriers and their diverse clientele. By partnering strategically, innovating creatively, and integrating seamlessly, travel insurers can leverage the ancillary wind and soar to new heights in the ever-evolving air travel market.
These insights are an extract of our 2024 Top 50 Airlines Travel Insurance Benchmark report.
Meanwhile, you might be interested in our past years release: