The Benefits of Air Carriers and Travel Packaging

Welcome to Travel Buddy

In episode 17 of the Travel Buddy Podcast, Nowell Outlaw, CEO of Switchfly, discusses the benefits of air carriers and travel packaging, as well as how Switchfly's technology makes dynamic packaging effortless. Airlines navigate razor-thin margins by creating additional revenue streams through travel packages, featuring hotels, cars, and activities. This episode offers valuable insights into the complexities and innovations within the travel industry, perfect for anyone curious about the intricacies of modern airline operations.

 

Key Highlights:

• The importance of ancillary revenue streams for air carriers operating on slim margins.
• An overview of dynamic packaging technologies that allow airlines to bundle flights, hotels, and cars.
• Insights into how major and secondary airlines are leveraging travel packages to enhance customer value and revenue.
• The role of travel agents in providing exclusive package deals not always available online.
• Challenges and strategies in integrating air travel solutions with localized currencies and languages.
• Future trends and potential markets, including unique offers like pet-friendly travel solutions. 

Quotes:

• "Air carriers operate on slim margins, so they look for other ways to add revenue through vacation packaging." – Nowell Outlaw
• "Our platform's ability to fit international capabilities makes it an easier fit for air carriers outside the United States." – Nowell Outlaw
• "Dynamic packaging lets airlines drive extra revenue while offering cost savings to consumers." – Nowell Outlaw

Transcript

Brandon Giella (00:02.01)

Hello, Noel, and welcome back to another episode of Travel Buddy Podcast. Today, we are gonna be talking about air carriers and ancillary benefits or additional revenue streams through travel packaging. So the story is some airlines maybe have trouble with some of their, how do I start over? I don't know how to get that. So the story is,

Nowell Outlaw (00:03.214)

you

Nowell Outlaw (00:22.99)

you

Brandon Giella (00:29.186)

Some airlines are, there's some stories of major airlines going bankrupt and we know there's razor thin margins. Airline is a very competitive industry and every carrier is looking for an edge. They're looking for additional revenue streams. They're looking for different ways that they can service their customers. But of course, the operations, the logistics of doing so is very complex to put it mildly.

One way that a lot of carriers, especially not maybe the major carriers, but some below that, maybe the secondary airlines are really looking for ways to add new revenue streams. And one way to do that is through travel packaging. so hotel, cars, even the customer service and the insurance, all that kind of stuff that goes along with it. And so can you talk a little bit about that market and what air carriers are looking for in that and why, and maybe how you guys are seeing that market develop right now?

Nowell Outlaw (01:25.614)

Sure. Yeah, you know, it's interesting because SwitchFly actually has a very long history, right? Doing this, I know one of our large enterprise clients started doing travel packaging with SwitchFly in 2006. So we've been doing this for, you know, almost 20 years, which is unbelievable. You know, the interesting thing is that airlines are looking for ancillary ways to sell things to the consumer.

Brandon Giella (01:42.063)

Nice, OK.

Nowell Outlaw (01:55.534)

That's why you see seat selection now. So when you go and buy a seat, there's the economy, there's upgraded seat, a little bigger, little bigger, first class, all those different things. Those are upsells. I mean, people joke about this, like, for toilet paper, it's going to cost me $5. Some have taken it to the extreme. There's a lot of low-cost carriers that have done that, and they manage that business a certain way for a very specific reason.

Brandon Giella (02:15.428)

Yes.

Yes.

Nowell Outlaw (02:24.364)

And there's other airlines that don't necessarily do that. But the fundamental truth is air carriers do operate on slim margins. And so they look for other ways to add revenue. And vacation packaging, so being able to bundle a flight plus, let's say, a hotel or a car, an activity together is how they do that.

If you go around and look, we've talked about this, right? How you can get better cost savings on, you know, packaging opportunities. And so what we're seeing in the market is, you know, there's all the big boys have this, right? The Uniteds, Americans, like they do this, right? They have holidays, you know, people should look for those. But what we're starting to see is kind of the secondary and tertiary markets. People starting to realize, well, you know, I only have so many seats on the plane.

All of the people that I'm selling an air seat to are potentially going to be buying a hotel room or a percentage thereof. Why shouldn't we be the ones to actually sell them the hotel seat or the hotel bed or the car rental or the activity? And so what they're doing is understanding that there's the point A to point B or round trip. But if you're taking a trip to Hawaii,

You're going to add a hotel, you're going to add activities, you're going to add a car, you're going to add all that stuff. And so they look for dynamic packaging technologies, which is what Switchfly is good at at its core, right? To be able to add that to their, you know, their core shopping experience so that now you can add a hotel or you can add a car rental and things like

Brandon Giella (04:13.754)

Yeah, it's so cool. So that's like, go to, you know, airline.com and I'm booking a flight and I see the little tab that's like, hotel plus flight or hotel flight and car. It's all that kind of technology. That's cool.

Nowell Outlaw (04:22.446)

Correct. Correct. Correct. Correct. And it's really driving extra revenue from them. And there is, for consumers, there's cost savings, right? Because the airlines, especially the bigger ones, they have the buying power, right? So if you're, if you fly to Orlando, right, and there's air carriers that do, they can cut really good deals with specific hotels, right?

And that savings is, you sometimes they make a little more money, but oftentimes they pass those savings on to the consumer, right? And that's how you get those packaged savings and discounts that you see in the market. So, you know, we have clients that have negotiated, you know, great deals in Mexico, right? We have other ones that have negotiated great deals in Aruba, the Dominican Republic, right? Other people have negotiated Las Vegas, right? All the places people go for vacation.

right, they have focused on, you know, what hotel partnerships can we put in place to help drive those things for both an improved margin and also an improved cost savings for the consumer. So.

Brandon Giella (05:34.399)

One thing you mentioned before we started recording was that it's not even just going to, you know, the consumer level airline.com, but it's also talking with travel agents, which I understand is still a career. And some people do use travel agents. I don't, I don't know anybody that does ever. Maybe my, in-laws, but, but yeah, but that, that the relationship that a travel agent might have with an airline or with a hotel provider, all of that kind of gets.

Nowell Outlaw (05:47.022)

Correct. Correct.

Brandon Giella (06:00.841)

networked if I could say like it all gets put together if you can do the dynamic packaging.

Nowell Outlaw (06:04.206)

For sure. For sure. And also, you know, we talked about this, about travel agents. you know, I needed to take when our boys were small. It was like, well, we want to go on a vacation. We want to go to Mexico. You can go and read online. Everyone says, we have a travel club. We have a travel club. We have a travel club, right, for kids. But, you know, at that time, it's like, well, my son's two and a half. Will they let him in? Will they do all this other stuff? Was it easy to get around? Like, as a parent, you're concerned. And that's why, you know,

Brandon Giella (06:10.051)

Yeah.

Nowell Outlaw (06:33.804)

travel agents exist and they're super helpful, right? And they can book all that stuff. And the interesting thing about, you know, being an air carrier, right? Is that air carriers can promote specific packages, trips, deals, coupons, know, financial incentives, whatever those things, they promote through those channels to agents, right? And so even though it might not be available on the website, right?

Brandon Giella (06:36.664)

you

Nowell Outlaw (07:02.51)

You might call a travel agent and say, you I want to go, you're in Dallas, right? I want to go Dallas to Cancun. I want to take the kids, you know, buh-buh-buh-buh-buh. And the agent says, well, you know, I have this offer from this air carrier to do a package and it's, know, $300 off, right? And you see, you know, with the, even with Black Friday sales and stuff, you'll see these kinds of offers starting to flow, but they exist a lot of times.

almost on a weekly basis in the travel agent community as well.

Brandon Giella (07:36.867)

We were just planning a trip with my mother-in-law. were thinking about maybe going to Italy for Thanksgiving or something like that. And based on our last episode, you were like, man, check out a travel agent. And so she was like, I know this travel agent. Do you want me to text her? And I was like, please, I hear this is amazing. So yeah, no, your advice has been super, super helpful. So, okay. So now, so we got the travel agents on one end that can book these flights with these carriers. But tell me a little bit more about like, so I know there's

Nowell Outlaw (07:44.408)

Yeah, correct.

Yeah. Yeah. Yeah.

Brandon Giella (08:06.095)

probably tons of logistics to pull off on how this works. There's a lot of pieces that you've got to connect. If I, let's say I own, I don't know, a hundred planes and I have a carrier and I'm trying to set this up for my business, that sounds complicated to put it mildly. Tell me about this.

Nowell Outlaw (08:20.692)

it for sure it's very it's very complicated and you know certain you know air carriers will go down that road right so they will you know they will figure out how to do how to have the hotel supplier relationships the car rentals relationships right and they will build out their own program that'll probably take you know 12 to 24 months to really get it all done right and get it rolled up and and ready to go what we have found on these kind of

you know, second tier carriers, right? Is that Switchfly having all of the moving parts ready to go in place lets them spin up a vacations, holidays, you know, travel solution in a very short period of time. And we're talking less than 90 days, maybe 45 days, including, you know, access to their air inventory, which is kind of the hardest step because we have the rest of it baked out. And when

when they're looking at it, Switchfy is a white label platform that also has a bunch of no code abilities in it, which means we can get your site configured and ready to go in like a week. And so as an example, we had a customer call us last week and said, I need another brand, basically. I need you to set up a logo, this and this and this. How long is it gonna take you to do that? We're punching the numbers, we're like,

we can be ready to go on October 24th, like 10 business days later, they're like, well, okay, like that's too fast, right? And so, but in the real world, right, it's, you know, it is time to adding revenue, right? And it's, you know, taking a year to spin up a program is great for some people, but there's a lot of carriers that they would rather figure out how they could have this, you know, ancillary revenue streams started, let's say,

Brandon Giella (09:55.018)

Hahaha

Nowell Outlaw (10:16.812)

January 1st, February 1st and put those things in place. And Switchfly basically has an end-to-end solution that can get that done rather quickly. And we have a couple of carriers right now that are basically going to launch in Q1 on the Switchfly platform, which is really good.

Brandon Giella (10:18.265)

Yeah.

Brandon Giella (10:36.047)

That would be wild because I mean we've talked about this before but yeah there's just so many like different little components to this I mean talking about like currencies localized currencies or the customer support traveler support situation insurance all that is so much to think about that's really amazing

Nowell Outlaw (10:49.986)

Yeah, and languages and you know, there's rules like in every country. There's different rules, you know language support. So, you know if I'm You know if I'm a Mexican citizen and switch. I has employees that are Mexican citizens. We we have Mexico People are great as a developers for switch fly. No, it's It's obtrusive to think and I think it's rude that the world operates in English, right? And so having a site that if you're coming from Mexico

Brandon Giella (11:16.141)

Yeah, right.

Nowell Outlaw (11:19.854)

it's in Spanish or if you're coming from Portugal, it's in Portuguese. If you're coming from Brazil, it's Portuguese. To show and display in the native language of your consumer is what you want. Likewise with the currency. So in the dropdowns, I know this is simple stuff, but not everyone can do this. In the dropdown, when you see the currency and you're in Mexico or you're in Brazil or you're in the EU,

it should say euros, should say Mexican pesos, it should say the local currency because people don't have to try to assume everything's in dollars, right? And that's just, a lot of tech companies aren't there yet, right? And so, our platform is able to fit that really well. And so when we talk to air carriers outside the United States, right? We have a lot of those international capabilities kind of built in and ready to go. And so it's an easier fit.

Brandon Giella (12:18.287)

That's super cool. Do you mind if I don't even know if you can share this, but I'm curious if you have like like a revenue calculation rule of thumb that let's say you have a hundred planes or something and by bolting on a travel solution like this, say in 60 days or 90 days, what companies might be looking at adding to their revenue? Yeah.

Nowell Outlaw (12:36.27)

Yeah, it's tough, right? I mean, it's really tough. mean, it's hard to identify the direct math of how that works, but we see programs that are doing 100 million a year in sales, Yeah, in the holidays business, right?

Brandon Giella (12:48.834)

Yeah.

Brandon Giella (12:55.811)

Just from the travel part, like by bolting that on. Yeah, it's amazing. Yeah, amazing.

Nowell Outlaw (13:03.898)

And you know, it takes time, right? No one, doesn't start day one that you build that, but every one of our airline packaging clients continues to grow year after year after year, right? So it gets better and better and better. Even though you see things like, well, flights are down or, you know, consumer travel is down, things like that. The leisure travel side for us continues to grow.

Brandon Giella (13:07.159)

Of course, yeah.

Brandon Giella (13:29.263)

That's cool. And I wonder if it's, if it's something like in the mind of the consumer, I'm just imagining I'm looking for different flights. And then I realized, you know, I really love flying American say, well, let me check out what kind of packages they're putting together. And I'll compare that with what I find on Google or whatever kind of search. You know, people are checking all those different sites, but as you start delivering, as the airline starts to put together great packages that are reasonably priced and have all the different components to it, it's like, yeah, I'll check that out. You know, always go back to that site.

Nowell Outlaw (13:56.654)

Yeah. know, the interesting thing is the points guy wrote a great write up. I think it was of American airlines vacation specifically that he went in and was trying to get the same price from the hotel and doing it individually, right? As what he was seeing through the vacation package and he couldn't do it. Right. He, he could not get the dollar savings that he was seeing in front of him.

on it in his cart, right, to check out in the packaging site as doing it independent because, you know, that's the way it works, right? If you buy things independently, you don't get basically the best deal, right?

Brandon Giella (14:33.24)

Interesting.

Brandon Giella (14:39.023)

Yeah, yeah, interesting. One thing I did, this is a this is an anecdote, I was trying to.

get a flight to Italy and I was looking at all these different things and I called a major airline because they wouldn't let me book my under two year old child in her own seat. So I had to call. So I called and the price that they gave me was almost a thousand dollars more than what I found online. And I was like, well, I'm seeing online it's, you know, 3,400 or whatever for the four of us or whatever. And she was like, yeah, I can't, I can't offer you that. That's what's online. And I was like, that doesn't, it's your site. You know, I thought that I just was so confused by that as a consumer.

Nowell Outlaw (14:52.302)

Correct.

Nowell Outlaw (15:06.958)

Correct. Correct.

Nowell Outlaw (15:11.852)

Yeah, sometimes there's different rate rules and things that they use for online versus agent flow and all this other stuff. you can find it. It depends on the air carrier. depends on how they want to engage that way.

Brandon Giella (15:18.031)

Yeah, I had no idea.

Brandon Giella (15:23.128)

Yeah. Yeah. Interesting. Okay. Last question. is there something interesting that you're seeing in the market right now? Interesting conversations you've had. I'm just always so curious, like what is on the mind of Noel Outlaw as he's like having all these conversations in travel, talking to carriers, talking to, you know, travel agents, whoever I'm just fascinated by what you're thinking about these days.

Nowell Outlaw (15:38.262)

you

Nowell Outlaw (15:45.262)

The interesting conversation I had yesterday was about pets and travel. Because you see lots of people traveling with their animals. I was talking to someone, said, you guys should really promote to those people about taking your dog. The answer was, from the airline perspective, the pets are a burden because they mess in the carpets and blah, blah, blah, blah.

Brandon Giella (15:51.555)

Okay.

Brandon Giella (15:55.065)

Mm-hmm.

Brandon Giella (16:13.465)

Sure, yeah.

Nowell Outlaw (16:14.232)

But I'm telling you, consumers with their pets are immensely loyal. I would never take my dog on a plane because they would probably kill people. But there is a kind of traveler that you could market to specifically around the special things that you do for pets or have for dogs and things like that. And so that was an interesting conversation.

Brandon Giella (16:40.183)

Yes.

Nowell Outlaw (16:43.598)

I just got off an airplane and the guy in front of me had a dog, the guy behind me had a dog. The interesting thing for it, don't know how this works, is that there are people in the world who have allergies. And I wasn't sure if you got on a plane and you were allergic to a cat and the person next to you, because how would you know, sits down with a cat in their seat. How does that work?

Brandon Giella (16:58.265)

Yeah.

Brandon Giella (17:07.225)

Yeah.

Nowell Outlaw (17:11.126)

Right. I kind of want I'm on this journey to figure that out now because like who moves do you have to move because you have the allergy as the cat owner have to move because they're the one who brought you know what I mean? That's kind of crazy.

Brandon Giella (17:23.599)

Well, if you know somebody that operates a, I don't know, like a travel technology that could package all of this together, maybe there's a selector for like, please don't sit me within five seats of a cat, you know?

Nowell Outlaw (17:30.734)

I know.

Nowell Outlaw (17:36.558)

Yeah, it's crazy. mean, it's just like, and there are a lot of people traveling with their pets, right? And it's just a, the real thing.

Brandon Giella (17:41.463)

I was going to say, yeah, I agree with you. If you could build some kind of marketing campaign or I don't know how you would pull it off logistically. That is a million things to think about, but I agree. know tons of people that would, I'm sure die for an airline that would accommodate their pets really, really easily. I mean, I have friends that, that wanted to, Colorado and they had to drive because they didn't know any airline that would take their pets. Yeah.

Nowell Outlaw (17:57.102)

Yep, there's a new.

Nowell Outlaw (18:04.878)

There's a new airline, I think it's called Bark Air, I think, or something like that. And it's specifically trying to cater to pets and things. there was one of those in Colorado maybe 10, 13 years ago. They didn't make it, right? Because, you know, again, not everybody getting on your flight is going, like not everybody with a dog wants to go to the same place you're going. And so you need the coverage network and that's

Brandon Giella (18:09.695)

I have not heard of this.

Brandon Giella (18:30.67)

Yes.

Nowell Outlaw (18:33.304)

When you're a small airline with two airplanes, you can't cover the entire United States,

Brandon Giella (18:38.625)

Yeah. And when you're, you're, it's a game of inches and airlines, you're paying an additional, know, if you want 33 inches of leg room versus 31 inches of leg room, you're paying extra for that. Like, I don't know how you can math the dog in the seat, you know, as, as well as you could. But anyway, fascinating. Okay. Well, Noel, thank you so much. I love, talking with you every week, pretty much about how, what's going on in the travel industry. And, I think it's air carriers, conversation has been really, really helpful.

Nowell Outlaw (18:52.204)

Yeah, don't know. Yeah. Yep, that's good.

Nowell Outlaw (19:02.958)

Yeah, it's good.

Nowell Outlaw (19:07.01)

Okay.

Brandon Giella (19:07.853)

We will see you next time for the next topic. See you All right. Later.

Nowell Outlaw (19:10.51)

All right, thanks.