By Mary Gooderham
Today’s travellers are finding more and more opportunities to buy things through airlines, from paying for onboard meals, premium entertainment and wifi to pre-booking hotels, rental cars and excursions at their destinations.
These so-called ancillary services increasingly mean big money – in fact even more revenue than comes through relatively low-margin ticket sales. That’s good news for GuestLogix Inc., a Toronto-based company that provides technology platforms to securely process such retail transactions.
With a 46 per cent share of the worldwide airline market, representing 1.25 billion passenger trips a year in 144 countries, the pioneering SME sees new markets, retail channels, partners, products and uses for its onboard systems on the horizon. Indeed the sky’s the limit as GuestLogix enters the e-commerce space. Its recent acquisition of OpenJaw Technologies of Ireland, the online seller of air, hotel, car and vacation packages, makes it the world’s first end-to-end ancillary solutions platform.
“The ancillary revenue market is taking off,” says Chris Gardner, the company’s executive vice-president of corporate development, noting that revenue from airline merchandising is expected to hit $180-billion in 2020, compared with $50-billion today. “It’s the golden egg for airlines.”
GuestLogix started in 2002 and went public in 2007, when it signed up to help American Airlines sell things on board, says Gardner. The company, which today has about 300 staff in nine cities around the world, has “pushed the edge on a lot of things,” providing both a service as well as processing hardware.
Sales take place using hand-held devices, seat-back screens and even people’s own phones and tablets. Its customers are primarily airlines, rail and bus operators; through the acquisition of OpenJaw, they also include online travel agencies, loyalty programs, hotels and rental car agencies.
The company has been supported through its evolution by Export Development Canada (EDC), which has provided accounts receivable insurance and loan guarantees through its export guarantee programs, Gardner says. “There’s a global expertise there.”
“There’s so much potential for growth in add-on services associated with travel,” says EDC Account Manager Joey Barnes. “Although it is a highly competitive field, GuestLogix has a good strong management team, but they have to stay close to their customers in local markets, he advises, especially in emerging countries.
Gardner says GuestLogix is making headway in the Middle East and venturing into Latin America, which “culturally hasn’t moved to this ancillary revenue quite as much as the rest of the word.” In Asia, traveller numbers are rising exponentially; the company has a 36 per cent market share of the 400 million passenger trips a year in China and 22 per cent of the 1 billion trips in the Asia Pacific region, he says. “There’s a lot more potential for us there.”
The marriage with OpenJaw means the two companies share platforms as well as opportunities to cross-sell across the entire travel journey, he adds. “We can support airlines in every single dollar they make now.”
Words of advice from Chris Gardner, executive vice-president of corporate development for GuestLogix:
Open yourself up to partnering: “Small companies always feel very proprietary. They tend to want to keep all the goods to themselves. But 60 or 70 per cent of a really large number is infinitely better than 100 per cent of zero.”
Stress your strengths: “Part of our success is being able to understand the credit card processing compliance in each country or region, depending on where you are. It gives us a strategic advantage.”
Try something new: “In the airline industry, everybody wants to be first to go second. Innovation doesn’t happen in a flash, but when it starts to move with one airline and they’ve sort of vetted it, all of a sudden it takes off.”
For more related to this story visit exportwise.ca