An international airline's ancillary product management is responsible for generating and improving services to complement the core business. This includes all food and beverage services, reservations with special details, VIP care offers and all services before, during and after the actual flight experience. The interim manager was tasked with systematizing the portfolio planning process and better integrating it into the group-wide planning and IT systems.
Tasks of Ancillary Product Management
In Ancillary Product Management, a flood of 100 to 150 service ideas must be prepared and evaluated each year so that the relevant committees can decide on costs, benefits and necessity. At the same time, Product Management is responsible for the introduction and life cycle of approved ancillary products as well as their differentiation and harmonization within the Group's airlines.
An example to illustrate this: Let's assume that a vegan option is to be added to the range of meals for business class customers on intercontinental routes. In this case, for example, it must be determined whether the target group is large enough and - if so - which routes or markets are the main focus. How can the respective caterer ensure that all components of the meal are actually vegan? How much does the new meal cost? Will there be any changes to the supply at the airports? When should the offer be advertised? How will it be presented on the website - and who will program the changes to the meal selection in the international reservation systems? How will billing take place? These are just a few of the many questions that need to be answered for a comparatively simple additional offer. In order to answer these questions, a wide range of departments and experts have to give their opinions - in as coordinated and economical a sequence as possible and with the relevant information. The expert results are then presented to the committees in the form of a business case - with the possibility of further changes, which in turn require coordination. The complexity increases even further if product management is to control the process centrally for all companies in the Group, but does not have its own staff everywhere.
Rudimentary Excel database replaced by professional planning
The product management team had previously recorded the complex processes in an "Excel database" with rudimentary functions. In order to provide those responsible with a sustainable and resilient planning tool, the interim manager first recorded all product ideas in the decision-making pipeline, including the personnel, time and organizational resources required for the decision. Following the same pattern, resources were recorded for the coming year. The interim manager transferred both into a simple planning system suitable for management, which is now also available for future planning and decision-making processes. This ensured that all relevant resources - and in particular the product specialists in the company's own department and in the IT departments - were available in a timely and planned manner.
Transparency in decision preparation and prioritization
The system developed for portfolio planning and the management processes from product idea to approval creates transparency in decision preparation and in the prioritization of work packages, ideas and projects. Resource bottlenecks can be identified in good time and appropriate plan adjustments initialized. The meeting structure within the department and with other departments and projects has been streamlined and shortened. At the same time, the impact of any ad hoc prioritizations and strategic products on expected additional sales, but also on costs within the scope of previous planning, could now be made transparent.
As almost all ancillary products also had to be integrated into the Group's process organization and Group-wide IT systems, the new planning quality and transparency was also very well received by other departments and projects.
Anciallary products make a significant contribution to earnings
In the year following the introduction of the portfolio approach, the airline reported that the share of revenue attributable to ancillary products had risen above 6 percent for the first time, making a significant contribution to earnings.
