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How any LCC can drive ancillary revenue through digitalization

January 13, 2022
Johannes MollJohannes MollDelivery Success Lead, Omnevo

A three-part series of blogs showing how LCCs of any size have a proven, low-cost entry option to seize the digital initiative in driving their ancillary revenue recovery. 

Case Study: SKY express – Implementing a Digital Ancillary Revenue Platform

This extended case study is the second blog in a series of three dedicated to the digitalization of ancillary revenue onboard LCCs, demonstrating how LCCs of any size can quickly and cost-effectively adopt digital strategies to support their drive for revenue recovery.

As outlined in Blog "Creating new digital ancillary revenue routes for LCCs", Omnevo’s evolution of its digital solutions opens up digital opportunities for airlines through proven solutions tailored precisely to each airline’s unique needs, timescale and budget. I’d now like to show you how those solutions are brought to life.

While Omnevo’s solutions are most widely known on-board FSCs with fleets of up to 150 aircraft, I’m using a smaller airline example to illustrate the adaptability of the platform to airlines of any scale. With a fleet of just 19 aircraft, SKY express has been able to position itself among the industry’s digital leaders in creating a new standard of experience for its customers and significant new competitive advantages for the airline.

SKY express – profile

Established in 2005, SKY express is a Greek airline headquartered at Athens International Airport, its fleet serving 35 domestic and eight international destinations. One of the few airlines to expand its fleet during the pandemic, including the recent delivery of its first A320neos among 12 new aircraft, SKY express celebrates its position as has one of the youngest and most environmentally-friendly fleets in Europe with the slogan, ‘The youngest and greenest fleet in Greece!’. The airline has been awarded the ‘Fastest Growing Airline’ award by Athens Airport for five consecutive years and is planning further expansion of international services in the near future.

SKY express - Growth strategy

As part of its recovery and expansion strategy, SKY express remains focused on expanding its network of mid-range European destinations and wanted to further raise the standard of its inflight customer service offer from the industry standard of a simple complimentary offering (coffee and orange juice). This also included the development of its new “SKY Drinks & Bites” expanded menu on international routes. The airline had no existing Retail program but wanted the capacity to establish, control and gradually grow its retail presence in the future.

F&B focus - Taking control

In developing its first stage of digitalization, in partnership with Omnevo, SKY express planned for a newly expanded product portfolio, includes a wider range of alcoholic and non-alcoholic beverages, hot drinks, snacks and sandwiches and, instead of continuing with its outsourcing model or appointing a contract caterer, the airline decided to create, manage and operate its own new, expanded F&B program. 

The contracting out of F&B and retail operation management as a complete package, including product selection and the operating system behind it, is obviously still common among airlines. While the simplicity of signing-off such a package and leaving it to the catering operator is appealing, the lack of versatility and the limitations on an airline’s control make this model a clumsy tool in today’s fast-moving market, particularly in its impact on the airline’s ability to respond to shifts customer needs. Such versatility will be absolutely crucial as passengers return to air travel.

SKY express wanted full control of its F&B program, gaining the ability to define its F&B offer precisely to its customers’ needs and, vitally, with the freedom to choose which caterers, suppliers and service providers provide the best options to support the program. 

Additionally, whilst creating a wholly new program may sound more complex than adapting an established system, in reality the clarity and versatility of the new platform is often simpler to establish than addressing the challenges involved in adapting an older system. Guided by Omnevo, this approach also enabled SKY express to develop its new program relatively quickly, avoiding the often lengthy selection process of appointing a caterer, and enabling a much greater degree of flexibility, both in creating an F&B program precisely to their needs and the capacity to edit the program at any time. 

While SKY express focused on F&B as priority No.1, its digital development simultaneously ensures that it can evolve its Retail program in the future, precisely tailored to the airline’s needs and desired timescale and, again, retaining 100% control.

The core platform

After close discussion with the Omnevo team, a digital solution was tailored to the needs of SKY express, prioritizing the airline’s key customer service and operational elements:

  • Retail/F&B Management - to manage Retail/F&B program, product offering, prices, deals and promotions, as well as financial reconciliation. This began with an initial focus on the essential core modules and work processes and subsequently expanding and advancing the airline’s systems from this solid foundation. 
  • Supply Chain Management - to manage suppliers, product procurement, and inventory management.
  • Logistics Module - to manage the logistics process, encompassing core management and logistics preparations, including development of the preparation process, creation of operational processes and procedures to bring the products to the customer, and return inventory.
  • ePOS for onboard sales and crew support. Training of the crews in how to integrate with the new operational procedures and operate the ePOS system, and then the development of deeper training in onboard sales skills.

Designing the platform

Instead of the huge complexity of integrating and implementing a series of packages and systems in-house - such as an ERP system for supplier management, another for Sales etc.  - SKY express was able to tailor its platform Omnevo’s ‘toolkit’ menu of modules precisely to its needs, working ‘out-of-the-box’ and integrating seamlessly. For an operation of this size the solution offers all the modules needed to manage suppliers, inventory, multiple warehouses, procurement and even invoice management.

The key to operational effectiveness and cost-efficiency is to develop exactly the launch platform that matches the airline’s needs. SKY express was able to select and license exactly the modules required, with none of the ‘add-ons’ and unnecessary ‘extras’ that many rival packages impose as integral elements of their solution. In the first phase of digitalization, the carrier was opting for a relatively limited F&B offering and therefore didn’t require an extensive suite of modules, but the option for a smooth expansion with additional modules in the future always remains open. 

One month into the new platform, with the new systems established and running smoothly, the SKY express operations team then wanted to further advance their system with the Procurement and Inventory modules, thereby managing their suppliers and purchase orders, creating deeper inventory management, performance tracking on routes, detailed financial reports etc. This process of establishing a working core platform and then expanding it is the optimal way of integrating a new digital platform smoothly.

Establishing new capabilities and skills

The biggest challenges we see in developing digital platforms with LCCs are not in the technical aspects or the adoption of software, but actually in the pressures on the airline to align with the highly regulatory requirements for the preparation, processing and movement of products, goods etc., such as the sealing of boxes, security clearance procedures, co-operation with airport security personnel, Customs approval procedures, sign-off procedures, and so on. With direct operational experience in these fields, the Omnevo team supported SKY express in designing and establishing the processes to manage these regulatory procedures, including the placement of team support in the week prior to the ‘live’ launch. 

Our working approach is that we are not simply a software provider; we also offer clients our experience and training support across their whole operations to ensure that the work processes and procedures that are supported by our platform are also functioning optimally too. Once the base platform had been designed and established we detailed the key operational processes, such as getting goods to the aircraft by smoothly planning and integrating the new operational procedures.

Our training specialists helped the airline’s management team in the planning and structuring of the program and then trained crew in how to integrate these new procedures into their onboard routines, including the fine-tuning of actions such as inventory checks, security seal checks etc. to optimize efficiency and performance gains.

The Crew – the pivotal revenue point

At Omnevo, we know our technology works but we also know that no matter how smart our system is, it’s only as effective as the teams that use it. That’s why we put a huge emphasis on crew training and engagement and have now developed our own specialist crew training services.

The efficiencies created through the blend of a core platform, smarter operational processes and crew engagement can be quite remarkable. However, these efficiencies can only be achieved through in-depth understanding across the overall crew procedures and efficiently incorporating sales tasks and processes within the holistic crew workflows. With the extensive experience we bring to the table we have not only been able to support SKY express on efficient and integrated crew workflows, additionally our training program also incorporates sales skills to enhance the customer experience and drive revenue, including product upselling, where applicable.

Expanding operations

With extensive experience across many large scale projects worldwide, we were also able to support SKY express across every phase of its digital development plan, including the successful establishment of support operations to underpin the airline’s new F&B program, including procurement, warehousing, and logistics operations – elements that some airlines can find intimidating. 

SKY express established a core warehousing operation at its Athens base and, having seen the smooth integration of that facility, gained the capability and confidence to quickly develop additional sites, when required. As mentioned, our team carries in-depth operational experience not only directly within airline operations but also in catering operations, including our COO, Peter Coelho, who integrated the operations of supply chain specialist Shifteo into Omnevo’s platform, including inflight ePOS, Supply Chain Management and Back Office for Catering Management solutions. In the third and final blog of this series, Peter will detail how Omnevo supports the digital transition process for LCCs, including the establishment of their own F&B operations, ePOS systems, and the training of crew.

George Lioumpis

General Manager / SKY express
Implementation of the Omnevo solution has helped SKY express with various aspects of the warehouse and its set-up. We have the ability to place orders with the suppliers through to the final delivery and warehouse acceptance plus the ability for product analysis and consumption. Throughout the process the Omnevo team has always been there for assistance and hands on problem solving.

Six steps to success

In closing, I’ll summarize the key factors that enabled Omnevo to support SKY express in quickly and efficiently establishing its new platform:

  1. A relatively short selection process, supported by clarity in Omnevo’s proven solutions

  2. A clear, shared focus on the airline’s needs and the essential core modules and work processes required – a ‘start small, scale fast’ approach

  3. Clear planning and proven tools used in developing the F&B operations, including preparation, logistics, security, regulations etc. 

  4. One week on-site warehouse expert to help ramp-up operations and configure the Back Office system 

  5. Short implementation time: 1.5 months (including crew training)

  6. A one week program of crew training and documentation sessions, including ePOS training and sales skills, also supported by an extensive e-learning program that we are continuing to expand to airline needs.

Even while the ongoing global crisis continues to hamper airline operations, the digital platform already provides significant operational advantages to SKY express, gains that will certainly accelerate as traffic returns. Currently, within the first three months of the new operations being embedded, SKY express reported that crew had adapted very quickly and effectively to the new system and were highly positive about the whole program, including immediate signs of a stronger sales performance. 

The proven abilities, speed of implementation and future-proof versatility of our solutions are adapted to the specific needs of each airline, precisely targeting exactly the range and scale of solution that is required. From relatively small LCCs to major FSCs, our digital solutions enable any airline to combine a new standard of experience for the customer with new benchmarks in operational efficiency. The airline takes full control of its revenue journey, driving higher revenue and seizing new competitive advantages in a highly challenging market. SKY express has demonstrated that airlines of any size can not only greatly strengthen their ability to combat the impact of the current crisis, but also establish a powerful, stable, controllable platform to drive future revenue performance.

In the third and final blog in this LCC-focused series, Omnevo’s COO Peter Coelho will detail how the new operational platform was implemented, including an industry-leading emphasis on crew training that helps drive exceptional gains in crew engagement and performance.