Mega rental car companies Avis and Hertz are just beginning to test the stickiness of the subscription model, and Netflix-like services are still rare in the travel space. But Mexican ULCC Volaris is enjoying success with its subscription v.pass plan.
Volairs launched v.pass a little over a year ago in partnership with technology supplier Caravelo. Users set up their subscriptions based on one way or round trip fights and baggage allotments. An automatic charge is applied to a customer’s credit card each month for 12 months, and when a customer is ready to travel, they log in, choose their flight and pay the required taxes. According to the Volaris website, a monthly subscription for one way domestic routes is MXN299.
Caravelo CCO Jonathan Newman told CAPA TV at the recent CAPA Latin Aviation and LCC Summit in Curacao that Volaris “challenged us sometime ago to help them become the Spotify of the aviation world” instead of Amazon given that customers of Amazon also complete transactions on other platforms. “But if you are a customer of Spotify the likelihood is you will not go and transact for music in any other area,” Mr Newman explained.
Volaris had a challenge with the cost of acquisition and re-acquisition of their customers, said Mr Newman. He explained customers were shopping every single month for the same journey, and if Volaris was the cheapest, they would choose the airline. “Instead of continuing to put out ultra cheap tactical pricing that they [Volaris] still had to pay to acquire the customers, with they re-engineered the idea of a frequent flyer programme and challenged us to build a subscription model for them,” Mr Newman sated.
Now, Volaris has tens of thousands of mostly subscribers that happily pay the airline for a guaranteed piece of inventory every month, said Mr Newman. “…what that does is decrease their cost of acquisition and reacquisition, it has reduced phenomenally the amount of credit card fraud because it is a tokenised recurring transaction that’s happening”, he added.
Volaris seems pleased with the results of its subscription model in the early days of implementation. During late 2018, Volaris’ business development senior management Juliana Ramirez told PhocusWire that v.pass gives the airline predicable cash flows and an ability to cluster pricing and offload distressed inventory.