Incremental Revenues: Doomed to Apparent Success?

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  • Anonymous
    Guest

    continentalclub
    Participant

    I’ve just read the extremely interesting article in the ‘News’ section which covers KLM’s intention to trial ‘a la carte’ dining in the economy cabins of selected services:

    http://www.businesstraveller.com/news/klm-trials-a-la-carte-dining-in-economy

    This sounds like a fascinating trial and one which I’m sure other airlines will watch very closely. It seems to me that it will raise some very interesting specific questions:

    For example, will any poor experiences or perceived downgrades to the ‘free’ food on offer be blamed on a commercial strategy to encourage migration to the paid-for option?

    What will happen when the inevitable mis-loadings of catering take place?

    What will the impact on crew SOPs be?

    Will crews be mandated to serve a la carte meals first, or will they in practice leave them until after the free service? Will we see ‘food envy’ or ‘service order’ envy on board?

    Ultimately, I do wonder whether lots of these de-constructed service models end up actually costing the service-provider some (or far more) than a standard, one-size-fits-all, process-driven, simply-delivered and easily-forecasted model.

    The danger is that too many departments get involved, with too many ancilliary costs incurred (web functionality for a start) and too many individuals are then able to/want to/need to (delete as appropriate) justify their own positions.

    There then becomes little opportunity/incentive for anyone to hand in a report that’s a) all-encompassing and b) makes themselves redundant when the figures don’t suggest that revenue and yield is being enhanced.

    Consider this: what’s the incentive/ability of those involved with the paid-for seat selection programmes at Singapore Airlines and British Airways to internally (let alone externally) report anything but the gross income from seat selection fees? Is it in their interests, or indeed is it even possible, for them to calculate the impact on overall levels of fare sales, and how many customers don’t even get as far as buying a ticket as they’re potentially put off by the perceived or actual seat selection fee; a fee which they would never face on KLM?

    Are these incremental revenue schemes therefore almost ‘doomed to apparent success’, failing both the customer and, ironically, the service-provider?

    Of course, I’d hope that KLM will have all the checks and balances in place to avoid this, but very, very many companies do not, and internal collusion/dillusion is rife across myriad industries.

    I’d be most interested in others’ thoughts and experiences, especially those which relate to perhaps analagous business practices in their own, non-aviation, industries. Have BT Forum readers seen their own companies try to increase revenue whilst actually overly-complicating processes, and failing to understand, review and report the overall implications of business model change?

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