"Would you like fries with that?"
McDonald's built an empire by offering something to consumers that would complement their purchase of a hamburger. It was offered to the right customer at the appropriate time, and it was not a complicated proposition.
That is merchandising done right, Timothy O'Neil-Dunne said in his keynote address at the OpenTravel Alliance Advisory Forum in Seattle.
If the airlines get it right, they will reap the rewards. But O'Neil-Dunne, who is the managing partner of T2 Impact, a travel technology and e-commerce consultancy, and the chief technology officer of LUTE Technologies, warned that getting it right was not a slam-dunk.
In January, the Internal Revenue Service ruled that ancillary services such as the checking of bags were not part of the core transportation product and, as such, were not subject to the federal excise tax that travelers pay for air transportation.
That was hailed as a victory for airlines, which collected $7.8 billion in ancillary fee revenue last year.
But there is a flip side to that victory, O'Neil-Dunne said. If the services are not part of the transportation product, they could become subject to state taxes.
"The federal government is not going to tax it. It's not covered by any immunity. You don't think states are going to look at this?" O'Neil-Dunne said.
If that happens, "it's going to become so complex," he said. "Taxation will become a major issue."
Another potential fly in the ointment is credit card fees. If an unbundled product results in three or four individual sales transactions, credit card fees could become even a bigger issue for airlines than they are now.
"The Achilles heel of ancillary revenue is financial fulfillment," O'Neil-Dunne said. "It will cripple the industry if we don't get it right."
As airlines practice their "new religion" of merchandising, they should not forget the customer.
"You have to stop looking at everything that moves – the air, a bag, a toilet – as something you can charge for," he said.
There is a lot that airlines can learn from hospitality sector about merchandising," he said, and it's not just about seats and beds. "It should be about experiences and services" that are not only easy to buy and to use, but are products and services that customers desire and want to buy.
The Best Western Burns Hotel in London, for example, offers customers a menu of "optional extras for your room" – red roses, a seasonal bouquet, red or white wine -- at the time of booking on its website.
"We need to change our core thinking as technologists," O'Neil-Dunne said. "We must instead become consumer/user advocates. As such, we need to focus more on making the hard things easier."
If the first decade of the century was all about access, "let's make the teens about making things about better use of our time. It is, after all, our most precious commodity."