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November 20, 2021

In-flight shopping like you've never known

For all the crap we give airlines, they really do labour in a struggling industry.

Yeah, they batter us over the head with ridiculous fees. And sure, by many accounts their overall customer service could use a shot in the arm.

But if we give them the benefit of the doubt here, all that pestering comes for a reason. Profit margins in the airline biz are generally razor thin, and companies have to push the envelope a bit to stay afloat.

So this latest case of an airline trying to make a few extra bucks should come as no surprise.

The New York Times reports American Airlines – with every major U.S. outfit not far behind – is testing out real-time shopping aboard planes, with high-end items like limo services and Broadway tickets up for grabs.

Now, this isn’t your traditional SkyMall catalogue at play. If the onboard test goes well, travelers would be able to make their luxury purchases in the middle of the flight, real-time. (Typically SkyMall provides an order be placed after the plane has landed.)

A Canadian company, Toronto-based GuestLogix, is actually behind the credit card reading hardware needed to pull off the initiative.

And if you can believe this, a brochure promoting its products describes onboard retail as unique because “operators are able to lock their doors with their shoppers still inside.”

Indeed, while maybe a foot-in-mouth marketing technique, the retail opportunities on flights are bountiful.

Discount Euro airline Ryanair has been offering some form of not-just-sandwiches-and-water shopping onboard flights since the 90s, and its success appears prevalent.

Its prices are cheaper than the average airline, yes, but Ryanair customers are said to spend an average of $15 with the company after the initial ticket purchase, compared to just $1 with U.S. airlines.

“Look at what’s going on in airports,” one source told the Times. “Anytime you have customers who are captive, who have nothing better to do, they’ll shop.”

Perhaps the most telling quote in the Times article is from John Tiliacos, managing director of onboard products for American Airlines.

In case you thought this might be a passing trend – that airlines would never have the gall to force shopping on us while we relax on vacation – Tiliacos not so cryptically tips his hand as to the future of in-flight commerce.

“We wouldn’t invest if we didn’t feel comfortable it would provide a fair rate of return,” he said.

“Given where we find ourselves as an industry, financially it behooves us to identify every source of revenue we can.”

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...