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Selling Smarter in Difficult Times

May 1, 2021

Inflight Magazine

Henry Canaday delves into the creative measures that helped lift airline revenues despite the collapse of passenger air travel.  The latest report from IdeaWorks and CarTrawler estimated that carriers grossed US$58.2 billion in ancillary revenue in 2020, one of the few bright spots in a terrible year. Per-passenger ancillary revenue actually rose more than 13% from the previous year. IdeaWorks CEO Jay Sorensen ticks off some of the most popular ancillary products: co-branded credit cards (from which airlines get paid for miles), seat assignments, large bag fees, checked bags, change fees and preordered meals. One reason ancillaries rose in a disastrous revenue year was that airlines were discounting at least some fares so steeply that passengers could afford to splurge on extras, Sorensen argues. Business travellers almost disappeared for a while, and cabins were full of first-time and inexperienced travellers. “Low fares drew out a new
category of passengers.”

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Frequent-Flier Miles Are Piling Up. Fliers Won’t Benefit Like Airlines Will.

March 26, 2021

Wall Street Journal

“You have travel returning, pent-up demand and an oversupply of miles,” said Jay Sorensen, president of airline consulting firm IdeaWorksCompany. “We are set for a devaluation.”  Frequent-flier programs’ job is to make fliers spend more than they otherwise would. A 2011 paper found they account for a 5% to 6% price premium.  Airlines typically list dollar and points prices for flights. Based on the exchange rate, IdeaWorksCompany calculates that each of Delta’s SkyMiles is worth roughly 1 cent, meaning rational customers should never pay more than that for a mile.

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One year in, these grounded frequent fliers want back up in the air

March 10, 2021

Washington Post
“We are now going on a year where many corporations have cut business travel almost completely,” said Jay Sorensen, president of IdeaWorks, an aviation industry consulting firm. “That’s never happened before. Any time you reduce travel for that length of time, it has staying power.”  International business travel is most at risk, Sorensen said, as outbreaks have made border-shutting more common. “I sense this is an end of an era in terms of the ease and cheapness of long-haul travel,” he said.

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Zoom vs. handshake battle to impact business air travel’s fate

March 8, 2021

Deutsche Welle
A recent study by Idea Works found that only 25% of all business air trips are undertaken to support sales and secure clients. Intra-company meetings account for 20% and those commuting to work by air for another 5%.  “This category [intra-company meetings] will be a strong candidate for cost savings and in-person activity will be condensed to fewer events,” the study found, adding that the need to travel to work will also “diminish in the era of remote working.”  The study concluded that between 19% and 36% of airline business travel would not return after the pandemic.  Article is in English.

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When will Covid-19 recede to a background threat?

February 25, 2021

Travelweek Canada
When consumers get to the point that they can treat COVID-19 as a background threat, that’s when recovery in the airline industry will take off in earnest.  That’s how Jay Sorensen, a veteran of the airline industry and President of consulting firm IdeaWorksCompany, sees the end game for the pandemic’s negative impact on travel.  In recent years, Sorensen’s company has become well-known in the industry for its airline ancillary reports, produced in conjunction with CarTrawler, charting the meteoric rise in revenue from the airlines’ profitable ancillary fee structures.

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Airlines Still Don’t Know When Passengers Will Return

February 19, 2021

New York Times
Some experts argue that corporate travel may never fully recover, with many in-person meetings permanently replaced by video conferences and phone calls. Travel for sales meetings, conventions and trade shows is least likely to be permanently affected, IdeaWorks, an industry consulting firm, said in a December report.  But shorter trips to meet with co-workers for a few hours — from New York to Washington, say — could be hit harder, it concluded.

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A Leisure Travel Recovery Is Being Held Back By A Lack Of Standardized Testing And Foreign Entry Rules

February 18, 2021

Forbes
The slow pace of development of a single global system for tracking and certifying the Covid-19 vaccination status of the world’s 7.8 billion people is delaying the beginning of a meaningful recovery of air travel demand.  Yet, even people who are tired of being cooped up by the pandemic, and who are eager to travel for fun again, likely won’t do so in large numbers until the industry and governments settle on a clear set of virus testing protocols and rules for crossing international, or even state borders. That’s according to a new study from travel consultancy IdeaWorks called 2021: How Airlines and Travelers Will Adapt as the Pandemic Recedes. It is a deep analysis of historical trends in human responses to major pandemics as far back as the 12th Century, and an analysis of current efforts to rekindle travel demand and the challenges that must be overcome to achieve that goal.

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Could airline stocks be a buy in 2021?

February 12, 2021

OPTO by CMC Markets
Between 2010 and 2019, revenues from such services consistently grew year-over-year as people became more willing to pay extra for a more comfortable flying experience. It should surprise no one that the pandemic squeezed this revenue stream. Total global ancillary sales plunged 47% in 2020 to an estimated $58.2bn, from $109.5bn a year earlier.  What may surprise you to know, however, is that ancillary revenues actually rose for the year on a per-passenger basis, according to research from IdeaWorks and CarTrawler.

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Daily Memo: Up To 36% Of Business Travel May Never Return

December 8, 2020

Aviation Week
A new study by a group of travel experts set out to determine what percentage of business travel may be permanently lost in the post-COVID-19 era.  The results weren’t pretty.  Produced by the IdeaWorks consultancy, the study took a novel approach by dividing business travel into seven categories, and then drawing on a variety of data sources to estimate each share’s percentage of the whole in a given year. Next, they turned to the question of how each category would be affected by the embrace of technology as a substitute for travel.  For each subset of corporate travel, the study’s authors assigned a high and low estimate for how much demand could be replaced by technology. Taken together, the study concluded that airlines will lose out on 19% of pre-pandemic business travel under a best-case scenario, and as much as 36% under a pessimistic outlook.

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More than one-third of all airline business trips could disappear after COVID

December 2, 2020

PhocusWire
A new report produced by IdeaWorksCompany and sponsored by CarTrawler predicts airline travel for business purposes will be permanently down at least 19% and as much as 36% compared to pre-pandemic levels, as a portion of trips are replaced by technology.  The Journey Ahead: How the Pandemic and Technology Will Change Airline Business Travel breaks down the reasons for business travel into seven categories, ranging from customer-focused activities such as “sales and securing clients” and “conventions and trade shows” to internally focused activities such as “intra-company meetings” and “technical support.” The report says the division between customer and internal purposes is 65% and 35%, respectively.

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