Thursday, 15 October 2009 00:00

Ancillary revenues could form up to 35% of airline earnings


Online travel insurance catching on among travel providers

The Ancillary Revenues Airline Conference 2009 forecasts that ancillary revenues are likely to account for up to 35% of airline revenues in the future.

And in the current climate of rising fuel prices, the global credit crunch and dampened travel demand, travel insurance is increasingly being sought after by travel providers as a new form of ancillary revenues.

According to Mondial Assistance, both online and offline channels can benefit but with the ability to generate revenue 24 hours a day without doing anything, online ancillary revenue from travel insurance looks to be the way of the future.

European low cost airline, easyJet this year renewed its eight-year partnership with Mondial Assistance. Last year, Mondial Assistance sold over 2 million online travel insurance policies to easyJet’s European customers, a 25% increase against 2007 when it more than doubled easyJet’s ancillary revenue from travel insurance sales.   

easyJet’s ancillary revenue grew 36% and made up 20% of its overall revenue in 2008.  Travel Insurance is the biggest contributor to their ancillary revenue, followed by car hire and hotels. easyJet’s partnership with Mondial Assistance suggests that through a robust eCommerce platform and a vast network of assistance service providers, an airline can generate significant revenue while enhancing its customer value proposition.

Travellers too are more aware of the need to buy insurance protection.

Mondial Assistance Director of eCommerce, Australia and Asia-Pacific, Carole Tokody, said that one claim alone for emergency medical assistance and repatriation could be thousands of dollars.

“The cost of emergency medical care in some instances can be prohibitive, particularly medical treatment in the US.  Many people simply cannot afford to pay this kind of money and nor should they have to, if they take travel insurance out before they leave home,” she said.

She added, “You don’t just want your customers to travel.  You want them to delight in their travel experience and tell everyone about it, so you retain their business and with a bit of luck, generate new business from the friends, family or colleagues they boast to.  If they run into unfortunate circumstances, you want to ensure they’re so well looked after that they still tell everyone about their positive travel experience, even if it wasn’t what they had in mind.”

Selling travel insurance online also offers customers convenience, which remains a key influencer in such a competitive space, she said. Customers need the convenience of purchasing travel insurance in their booking through a seamless, automated, integrated solution.

”Customers should also take responsibility for their own wellbeing when traveling. Often customers think about travel insurance but don’t get around to it because it’s just an extra thing to organize when they’re busy in the lead up to their departure.  By providing them with a quick, easy solution, we’re making it easier for them,” Tokody said.  

She added, “In this day and age, and particularly with more gen Y’s coming through, customers are savvy about value and choices.  The internet has allowed us to service customers 24 hours a day, wherever they are, but it also means customers who shop online, expect choice and convenience.

“Unlike hotels and car hire, travel insurance can be designed or tailored for each specific travel partner. For example, a Low Cost Carrier (LCC) traveler has a different sensitivity to price than a passenger on a network carrier. Tailored solutions means a fully comprehensive product can be offered for network carrier websites, while a budget cover can be sold to LCC customer.”

Behind the scenes though, the Mondial Assistance solution is a little more than simple. Every two seconds, their teams help someone around the globe. Last year, 4%  of the world’s population received cover from Mondial Assistance. They looked after 25 million people.  

Mondial Assistance Regional Director Asia-Pacific, Peter Edwards, said it is the strength of the group’s global investment in people and a proprietary ecommerce platform that has allowed Mondial Assistance to push the boundaries of consumer interaction through online travel insurance since they began offering through this distribution platform in 1997.

“Mondial Assistance Group has invested tens of millions of dollars in the last few years to develop a world-first ecommerce platform under the leadership of people like Carole Tokody, our Director of eCommerce, Australia and Asia-Pacific.

And that has allowed us to offer un-paralleled innovation and value to companies like Virgin Blue. We are confident that through our partnerships, we will continue to push the Asia-Pacific market forward,” he said.

For more information, contact
Carole Tokody
Director of eCommerce, Australia and Asia Pacific
p: +61 7 3305 7083
m: +61 419 774 064
e: This e-mail address is being protected from spambots, you need JavaScript enabled to view it

Greg R Plifka
eCommerce Sales Manager - Asia
p: +65 6535 3585
m: +65 9647 1649
e: This e-mail address is being protected from spambots, you need JavaScript enabled to view it


 
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