Getting people to travel again

“The Travel Again program allows anyone to purchase a travel certificate today, and in return, get a monetary bonus added to the certificate. The value increases over time, allowing travelers to spend what they can now and watch that amount grow until a future travel date,” Pramod Jain, COO, Plusgrade.

Signs of a slight uptick in air travel demand as national and regional lockdown measures related to the COVID-19 pandemic ease provides cautious hope for airlines. Still, many airlines appear conflicted and confused about how to manage social distancing concerns among prospective passengers.

In early May, ancillary solutions platform Plusgrade unveiled its Travel Again program to spur bookings among consumers who know they want to fly in the future, but aren’t sure precisely when and to where.

Travel Again allows individuals and companies to purchase a certificate for a flight (or a cruise) that can be redeemed at a later date.

Under the program, “a traveler purchases a $500 certificate today, and can redeem it for $1,000 of future travel later this year, or purchase a $500 certificate today, and redeem for $750 next year,” Pramod Jain, Plusgrade’s COO, tells Kambr Media

As an added incentive for consumers, Travel Again certificates increase in value each month (the travel brand sets the monthly growth rate and expiration date of the certificates).

And there’s another benefit designed to appeal to Plusgrade's airline and cruise line clients: Plusgrade is offering the Travel Again program, which includes access to a web portal for processing the certificates, at no cost to clients. On top of that, Plusgrade is not taking a percentage of the sales it processes.

In a larger sense, the program shows how travel tech companies can stay relevant during this historically painful period for the industry in general. In more normal times, Plusgrade’s primary focus is on helping travel brands sell unsold premium bookings. For the moment, its focus is on promoting recovery through the crisis by getting revenue into clients’ pockets now, while laying groundwork for the recovery.

In addition, we spoke with Jain, who is working from his home in Montreal, about his thoughts on how the airline industry should address the current issues over whether to charge for greater middle seat spacing in this social distancing moment.

Kambr Media: What is Plusgrade focused on? Creating offers to help airlines manage unsold premium seats?

Pramod Jain: We believe that travel is what connects us all. 

From day 1, it's been about much more than managing unsold seat inventory; we set out to help travel companies work smarter, drive more incremental revenue, optimize each journey and create the best possible experience for their passengers. That philosophy still runs through everything that we do.

Our signature product provides travelers with an opportunity to bid on upgrades to a superior class of service. We’ve expanded that offering to support our partners' needs across all ancillary and revenue merchandising opportunities—including offering the ability to purchase an empty seat next to them or an entire row.

Our intense customer focus is the core of our model—without it we’d just be another SaaS company. We enter a partnership with our customers because we understand that if they’re happy and successful, then so are we. Because of this, over 70 travel companies worldwide—including Air Canada, Lufthansa, Singapore Airlines, and Royal Caribbean International—trust us to deliver their key revenue streams.

How are you serving clients, particularly airlines right now, but as well as the cruise industry?

We are building a platform that emphasizes the value of human experience and connection. We built the business with a revenue share model, tying the success of each one of our partners to ours, ensuring that together we are moving in the right direction. So we, like all of our partners, are seeing a significant impact to revenue based on the simple fact that people are not flying.

But, we are actually more focused than ever. More focused on creating tools to help accelerate the recovery of both our airline and cruise partners, something very foundational to our business. Plusgrade emerged from the 2008-2009 crisis during the recession, along with ancillaries. Our products were the key component that helped them rise up stronger after that crisis, all of whom are still partners to this day. 

We are seeing these same trends happen today.

How is Plusgrade responding to this crisis?

Many headlines project that the recovery may take years. No one knows what exactly is to come, or for how long this will last, but we can’t just sit and watch the industry remain on standby for the foreseeable future.  So back when shutdowns began, our founder and CEO, Ken Harris asked our team: “How can we help compress the timeline and accelerate the road to recovery?” 

After just a few short weeks, filled with inspiration, we launched an initiative called Travel Again

The Travel Again program allows anyone to purchase a travel certificate today, and in return, get a monetary bonus added to the certificate. The value increases over time, allowing travelers to spend what they can now and watch that amount grow until a future travel date. 

The program is completely free for participating airline or cruise partners. We wanted to ensure we gave airlines tools to immediately offset liquidity pressures and fast-track revenue recovery, while giving people something to dream about.

How does Travel Again work?

The principle is simple. You purchase a certificate today for your desired amount and it will grow in value over time until you redeem for future travel. 

For example:

A traveler purchases a $500 certificate today, and can redeem it for $1,000 of future travel later this year, or purchase a $500 certificate today, and redeem for $750 next year.  The pre-paid certificate grows in value through a bonus percentage amount that accrues each month, or until a certain point in time like the example above. This growth rate and expiration date is configurable by each airline.

What’s your take on proposals to block the middle seat? 

I think the proposal to block the middle seat is primarily driven by two things: optics and fear. I also believe that this is why we haven’t seen a consensus across the airlines and governing bodies on what is the right route, and why we are seeing people flip-flop or draw back initial positions—like IATA and Frontier.

From an airline perspective, the goal is to instill trust in the passengers' minds, get the engine going again and get people back in the skies. We’ve seen suggested redesigns of the aircraft, new regulations from check-in to arrival, and enhanced sanitization protocols. At the heart, these tactics are all to mitigate passengers’ fear to fly again.

Although making passengers “feel” safe is important, it doesn’t necessarily contribute to the lessening of the spread of germs or helping our industry rebound. In the end, this model is unsustainable (given low yield, less operating margins, and apprehensive passengers) and unscientifically proven (to reduce the spread of a virus). There is a large part of passenger education being missed and we think it begins with giving them more options. 

What’s your sense of the feasibility of airlines blocking the middle seat? 

There's a famous saying in the airline industry (I’m not sure who said it): if you want to be a millionaire, start with a billion. There's a reason for that, because the margins are so thin. 

So, when you start doing things like removing capacity by blocking purchase of the middle seat, you're bringing the plane down to 58-60 percent capacity, not to mention the operating cost of things like sanitization, extra security checks, airport fees, and labor that will all go up. Then the question becomes, “How are you going to get that revenue to at least cover your costs?” The only way to do that is to increase ticket prices. But, if you increase the price, you're going to have a hard time driving demand. It's a vicious circle in this regard. 

Airlines seem to be caught between a rock and a hard place: keep fares low to encourage travelers to fly again, but lose money flying emptier planes. Or increase prices, when passenger appetite for travel is in flux. But, there could be a different route that keeps both parties happy and flying sooner. 

How should airlines be responding and reacting with regard to the middle seat issue and the need to make passengers feel secure when they fly?

Each airline is in a different place, with a different set of customers and different financial standings. Mandating at either end of the spectrum will benefit some and let others suffer more significant impacts and potential bankruptcy.

Airlines should be thinking about their passengers, employees, and their bottom line.

I strongly believe this is about responding to passengers' needs today, but have the mechanisms in place to monetize this new standard moving into the future. 

 We need to get flying going. We need to make them feel safe. But right now that’s only happening in the airport: contactless check-ins, sanitization regulations, etc. Once you’re in the aircraft, there’s not much more you can do. This is where we need to give customers the choice. 

Allow passengers to choose whether or not they want to purchase an empty seat next to them, or the entire row. And if they don’t see the need for additional space, they simply don’t purchase it, but this way it saves [airlines] from incurring the cost of the entire aircraft operating at 60 percent capacity. 

This is where technology comes in. 

Showing prospective travelers the right offer—that suits their traveling profile, their route, their travel day, the load factor of the plane and fair class—means providing that choice in a meaningful way that will likely increase the probability of a purchase.

If I'm flying from JFK to Montreal on Tuesday afternoon, the flight is short and it’s not a busy travel time. I’m, therefore, less likely to spend on more personal space. But if I’m traveling from New York to Paris on the red-eye, I’m more willing to spend extra to ensure I don’t have a stranger breathing on me for almost 8 hours. The technology should be predicting these instances where a passenger has a higher willingness to pay, and most importantly, offering them the experience they are looking for.

Do you see allowing passengers to choose an unoccupied middle seat next to them would be a good ancillary strategy for airlines?

Absolutely, and I think now more than ever. 

When the dust settles, and the demand and supply question comes back into the picture, you will see that airlines have to survive. In general, the only way to do that is by increasing prices. We talked about how higher prices will impact demand. The next thing that will happen is airlines will have to figure out what the new base fare should be. Then, you build out your ancillary products.

If we look back, it’s like what was done with checked bags. Offering passengers to purchase an unoccupied seat beside them, or the entire row, will become a good ancillary option for the airlines because social distancing will be the new normal.

From Plusgrade’s perspective, we’re not just looking at providing the ability to offer passengers the option to block the seat next to them. We’re going one step further. We’re leveraging our breadth of data collected over the last 10 years in the industry, and using it to predict willingness to pay and load-factor probability. Based on this information, we can best recommend which ancillary product to offer which passenger, when, and on which route.

Personally speaking, what will it take to get you flying again? Or do you already feel safe to fly now?  Where do you think your next flight will be to?

Mentally, I'm ready, to be honest. I was a frequent flyer pre-COVID-19, traveling 250,000 miles a year. Being grounded now for roughly three months feels like, "Okay, I'm missing something." 

I think the steps that are being taken now make me feel safe to fly, like going through airports and proper social distance in place, wearing a mask, that’s all fine to me.

But I would look to buy a row on a flight, because I don't know whether the person next to me has followed the same sanitization process I’ve followed or not. I think that would give me some piece of mind more than anything else. 

But if you ask me, I'm ready to travel. I need to travel to my mom, who is in India. I haven't seen her for a while. That's a personal trip. As for business travel, I just want to see our partners, our airlines and cruise lines. So, yes, I'm ready.