Ancillary Revenue of an Airline

Airline Economics
New answer on Jan 10, 2022
5 Answers
372 Views
Anonymous A asked on Jan 08, 2022

 

Hi, 

For a butique consulting firm interview, i've been given a case on “how to increase the ancillary revenues of an airline". 

I'm struggling about how to structure the case, your comments would be appreciated! 

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Luca
Expert
Content Creator
replied on Jan 08, 2022
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello there,

The best way to approach this kind of brainstorming/problem solving is to structure your thoughts in order to help your creativity and not miss anything.

For example, you may divide the ancillary revenues of an airline in the following way:

  • Before the flight/during booking (priority, seat selection, additional luggage, car leasing, hotel booking etc.)
     
  • During the flight (food&drinks and products sold on the airplane)
     
  • After the flight (priority luggage delivey, transportation to hotel, ticket for buses and/or local attractions)

For each bucket you should run an assessment of the as-is situation, the potential impact and the feasibility.

Hope it helps,
Luca

Was this answer helpful?
Lucie
Expert
replied on Jan 08, 2022
10+yrs recruiting & top BCG trainer and coach & BCG Project leader & experienced hire & ICF coach

Hello, 

as a former Pricing Airline analyst and then being responsible for ancillary pricing for a global hotel chain, I would break it down eventually choosing one of the following groups:

  • Type of the product (standalone vs. packages = fare families)
  • Direct product from the airline vs. partnership where commission is paid to the airline (e.g. transfer, hotel booking, car rent, etc.)
  • Customer journey (Luca's answer)

Once you would define your lens, you should break it down by customer segment (e.g. Business vs. Leisure, Individual vs. Groups, etc.). 

If you would like to dig deeper, please feel free to reach out. 

Wishing you all the best, 

Lucie

Was this answer helpful?

 

Was this answer helpful?
Hagen
Expert
updated an answer on Jan 09, 2022
Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring

Hi there,

First of all, congratulations on the invitation by the boutique! I hope you aced it.

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

  • Generally speaking, I would advise you to get knowing about the following three things in order to be able to lay out a truly customized structure - otherwise, it will always stay vague and detached from the interviewer''s questions:
    • The goals of the client incl. limitations and metrics to measure the goals
    • The scope of the question (e.g. should you also think about how to implement/ prepare the implementation of the new revenue streams)
    • The business model of the client (e.g. airlines highly differ from one to another)
  • When it comes to structuring additional any type of case study, I would advise you to use a structure that feels most intuitive for you. In this specific situation for instance, I would advise you to structure potential additional revenue streams along the customer journey (i.e., e.g., while booking, before the flight, during the flight, after the flight) - and maybe distinguish on the lower level between business and leasure customers.

In case you want a more detailed discussion on how to best structure any type of case study, please feel free to contact me directly.

I hope this helps,

Hagen

(edited)

Was this answer helpful?
Ian
Expert
Content Creator
replied on Jan 09, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

I love Luca's answer. Note how he didn't just list a bunch of revenue ideas.

Proper brainstorming involves structure. This makes sure you brainstorm effectively :)

Another way would be to split it across products and services.

Was this answer helpful?
Clara
Expert
Content Creator
replied on Jan 10, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

+1 to Lucie, and she is the most qualified of all of us to help you out with this question"!

Cheers, 

Clara

Was this answer helpful?
Luca gave the best answer

Luca

Content Creator
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached
61
Meetings
2,939
Q&A Upvotes
32
Awards
5.0
19 Reviews