360 retailing
Low-cost UK airline Flybe is determined to sell to its passengers before, during and after their flights. First up on the agenda is wine. Nicki Saunders catches up with the airline’s retail manager, Raymond Kiersey
UK-based regional airline Flybe is out to prove that low-cost airlines can run a high-profit retail business, like any other carrier. When UK domestic airline Flybe acquired British Airways regional airline business BA Connect in November 2006, becoming Europe’s largest regional airline in the process with over £600m in revenues, the company began a new approach to inflight retailing.
“Though we’re in the low-cost market and it’s a really competitive market, we wanted to show passengers that we can offer something extra,” Flybe’s general manager for retail, Raymond Kiersey, tells Frontier. “We really should be a one-stop shop for customers.”
The carrier is working on a concept it refers to as ‘360 retailing’, which involves targeting the consumer before, during and after the flight.
“Before the flight we’re looking at having something like prepaid vouchers just like a top-up on your mobile phone, where you can buy a voucher for £20 but pay £18 for it, for example, and then use it onboard the flights for whatever you want,” Kiersey explains.
Onboard the flight, Flybe will continue to offer a range of products that you would not always expect a low-cost airline to offer, including a number of exclusive fragrance brands. “We’re the only [UK-based] low-cost carrier that is allowed to carry Chanel,” Kiersey points out.
“Chanel No. 5 and Vera Wang are actually our top-selling fragrances, which shows the level of clientele that we have and the prices we can command.”
Since the integration with BA Connect in 2006, which extended many of the airline’s short-haul routes, the company has bolstered its business passenger base, but caters for a significant number of leisure travellers, according to Kiersey.
To complete its vision of ‘360 retailing’, the carrier intends to encourage consumers to buy its products after they have finished travelling by offering the same prices onboard and paying the VAT for the customer.
The first retail initiative the company launched to try and achieve these three aims is the Flybe wine club. The bar and deli category remains the carrier’s most successful product sector, and the introduction of the wine club has been a successful extension of this.
Flybe set up a website (www.flybewines.com) which enables members – those who have registered – to access special discounts on wines, wine reviews and Flybe offers.
The wine club was launched in the summer last year in conjunction with Wines4Business, a wines supplier founded by Peter Jones, businessman and judge from the British television series for budding entrepreneurs, Dragons’ Den. The wines the carrier offers onboard are all sourced from the wine club.
“The wine club has gone down quite well,” says Kiersey. “It’s seen as a nicety – it’s never going to bring in the revenues like automatic seat assignment or credit card charges, but it’s something to say – we’re Flybe, we’re different.”
According to Kiersey, the website is used most often by customers, not during the process of booking a ticket but after they fly, especially during peak times of the year and festive seasons when people tend to bulk-buy wine. The initiative began after the integration of BA Connect, explains Kiersey.
“We had lots of passengers still on the BA branding and they were expecting the same sorts of things you would get with BA, so we though, why not provide them?” The carrier has also employed Sunday Express wine critic Jamie Goode to provide candid product reviews on the wine club website. Although the company does not currently offer a pre-order facility, this is something it has on its agenda for 2008.
The coming year is going to be a tough one for all UK-based carriers, admits Kiersey. “People will be feeling the pinch from the economy, so I think that’s critical that on our side we show the massive savings people can make by buying onboard.”
According to Kiersey, another challenge for the airline retail sector is the cannibalising of sales – particularly of “convenience” purchases – by airport shops. “The airports are getting smarter,” he explains. “Over the last twelve months they’ve started moving their shops closer towards the gates airside… There are lots of vending machines now at the gate and on the way to it, so you’re tempted constantly even before you get to the aircraft.”
The answer, for Flybe at least, is to reach the consumer before and after they fly, something the carrier is on its way to doing with the wine club. “It’s up to us to battle these issues by sending pre-trip emails and providing pre-trip offers so we’re giving passengers upfront discounts even before they fly,” Kiersey concludes.
While its wine club has just got off the ground, the initiative shows that low-cost carriers can drive retail revenues by knowing their consumers, picking the right brands and marketing these correctly. “We do a lot of research and ask ourselves what are we trying to offer and what’s the end goal.
” Part of that is making sure the airline offers brands that customers know and trust. “We really want to get into people’s lives – just because you fly doesn’t automatically mean you change the way you live.” Flybe is committed to offering the brands that its customers would see, and buy, on the high-street, with important price differences.
To a certain extent it is also about changing passenger perception of in-flight retail onboard low-cost carriers, says Kiersey. “Some passengers think because you have a low price ticket that means they’ll be ripped off inside the airline, and it’s not like that at all – we are showing that we can give you value for money for high-street brands.”
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