AIRLINES & ALLIANCES

GLO Interview: Daniel Gelemovich, Volaris on being a digital airline (Full Interview)

00:00 On Volaris’s strategy as a digital airline• 02:01 On marketing strategy • 04:24 On social media strategy and influencers • 06:26 on Volaris’s loyalty program V Club • 10:35 On the use of personalisation, AI and flagship VPASS product • 13:07 On partnerships and OXXO, the largest convenience chain in Mexico • 15:53 On multi-modal alliances • 17:00 On sustainability efforts • 20:53 1'000'000 miles question • 21:33 Magic wand question • 23:00 One piece of advice

GLO

00:00 On Volaris’s strategy as a digital airline vs. traditional carriers

02:01 On elements of the marketing strategy of digital airlines vs. traditional and more classical carriers

04:24 On social media strategy, using influencers in addressing young customer groups

06:26 on how Volaris’s loyalty program V Club is playing an integral part in digital strategy and is integrated into digital strategy and overview of the latest products;

10:35 On the use of customer data, personalisation, predictive analytics, AI and flagship VPASS product

13:07 On partnerships and partner strategy, partnership with OXXO, the largest convenience chain in Mexico

15:53 On multi-modal alliances

17:00 On Valaris’s sustainability efforts and values and who is the leader in this trend – an airline or a customer

20:53  One million miles question

21:33 If you had a magic wand what new feature or technology to your loyalty program would you add

23:00 One piece of advice to young professionals

Full Transcript:

00:00 GLO: Dear Daniel, it’s a pleasure to welcome you to Aviation Festival Americas, and thank you so much for finding time to talk about Latin American aviation insights to GLO.

Daniel Gelemovich, Director of Marketing and Digital, Volaris Airlines: Thank you. 

0:18 GLO: You are the Chief Marketing and Digital Customer Experience Officer for Valaris, one of the two largest airlines in Mexico, very rapidly growing. Last year you carried 33 million passengers, but what’s unique about your position is that you combine the head of digital marketing channel, and customer experience, as well as elements of the loyalty strategy. Can you tell us how different your digital strategy as a digital airline to the traditional carrier?  

Daniel Gelemovich: Well, as you said, we are in a unique position in Mexico. It’s a market where most passengers fly in low-cost carriers. So how we did do this? It was a mix of digital and innovation, including going after non-traditional passengers. We can fight for the same passengers among all the airlines in Mexico and, of course, we do that. But what is unique about us is that we started to show the people who hadn’t traveled before by plane that they could travel. So we call this “the bus switching” strategy. We go for passengers that used to travel by bus. Mexico is a big country, so they used to have 12 hours, and 20 hours in a bus without air conditioning, with stops, and they can travel now by plane in a low-cost carrier for the same price. We have been attracting those passengers that didn’t travel before by plane.

01:56 GLO: Typically, with low-cost carriers, the key factor is discount or the price.

Daniel Gelemovich: Yes.

02:01 GLO: Apart from this, are there any elements in your marketing strategy that differentiate you and put you with some of the more traditional and more classical carriers?

Daniel Gelemovich: Yes, we focus on cost. In terms of marketing, we do several initiatives. For example, we go to the bus stations and swipe the tickets they have for a bus to invite them to travel by plane for the first time. And when they decide to travel by plane, they stay in the plane. So we have a survey. We ask them, after they try the plane if they will travel the same route again by bus. And 80% say that they won’t. Once they try the plane, they will stay there.

It’s also interesting that we try to reach the mothers or the grandmothers, because oftentimes they make the decisions for the whole family, in terms of vacations or traveling decisions. So we want to reach them, explain to them, help them, how they can make a reservation. And it’s quite interesting because you have to mix approaches.

We’re also a digital airline as we have no traditional stores, and we were the first airline in Mexico to have an app or to have a digital boarding pass. So we try to digitize these audiences and explain to them how they can create the boarding pass, so they can avoid long lines in the counters. So it’s very interesting. We have several, we call them educational campaigns, where we explain with tutorials, with advertising, how they can easily use the app rather than go to the airport. And when they start doing that, they think it’s fabulous. And they want more and more. So that’s part also of our strategy.

We are creating a new app, where we will tell the passengers all the time their next best action. So it will have embedded messages – it will say “Your check-in is open, now you have to go to check-in”, “Now you can leave your luggage here and avoid the counter”, “Now if you want to cross security, the line number 2 is less busy, so you can go there”, “Now go to gate number 5”, etc. So with the app, you can do all this and it’s a seamless experience.

04:24 GLO: I would assume that line part of your customers, they’re quite young. So your passenger base is quite young and that was probably very appealing to them, with a smartphone penetration. For your social media strategy, are you using influencers? Are you actively present on the usual Instagram, TikTok? Is it important for you?

Daniel Gelemovich: Yeah, it’s very important. We use all the main social media channels, but we differentiate the messages according to the audience we have in each channel and depending on what the channel is meant for. For example, if we want to give you a tutorial explaining how a plane takes off how it lands, and how we change the tire or the engine because many enthusiasts want to know about that, we will use YouTube for that.

If we want to create fresh content branding with music? We have a command center, we will spot all the trends in social media that are happening any day. For example, if we figure out that Taylor Swift is releasing a new album (this is a recent example), we create a similar cover for the album, but with Volares elements, and we get lots of engagement from people like that, because it’s trending. So we have to be very fast. We will use TikTok for that, or maybe Instagram.

For example, we have like the Sunflower Day. So we figured out that people were talking about the Sunflower Day, so we created it with AI an airplane with a livery with sunflowers, a Volares livery just painted with sunflowers. We went back very quickly to Instagram and to Facebook to show that livery and people were happy that we were participating in that kind of conversation. 

06:26 GLO: That’s quite exciting you mentioned the Taylor Swift effect. The majority of your population, the majority of your customers is Gen Z and moving into Gen Alpha, and the recent studies at GLO are showing that they’re different types of customers. They are much faster to act, and they are less loyal vs. more traditional older customers. I know you guys have a loyalty program called V Club. How important is it for your customer base, and how are you integrating it into this digital marketing strategy?

Daniel Gelemovich: Yeah, we agree. Traditionally, low-cost carriers focus more on cost than loyalty, but now as you said, things are changing with the new generations, and we have to be mindful of getting to them attracting them, and being important to them. Of course, they will find very attractive low cost first, but what else can we give them that it’s in line with the model?

So we have some products that are very interesting for them. For example, we have the V Club, which is our flagship program. You can subscribe to the V Club or you can get a subscription. We have a promotion that if you buy our zero fare, you will automatically be enrolled and you will get a membership. You will get discounts. For every time you purchase, you will have a better price than what’s published.

Then you will have special marketing days, for example, typically Thursday or when we have big promotions, there will be a special day for V Club members. So they will have additional discounts. They will have ancillaries included in their reservations, depending on the point of time. So this is our flagship. But it’s very interesting.

As you mentioned, Gen Z and millennials, centennials, want different stuff. They want to travel a lot. It’s part of their life. So it’s also interesting how the workforce changed after COVID. Now there are lots more hybrid positions, and people working from home, like the digital natives work from anywhere. So we created a new product that is also related to loyalty. It’s called “The annual pass”. And you can buy this pass for a very cheap price. It’s around US$400 and you can fly all you want if you have flexibility. The idea is that with this pass, you already paid for the airfare, you don’t need to pay anymore. 24 hours before domestic flights or 48 hours before international flights, you can go and find empty seats on any available flights. You can go into the flight just paying the taxes, but you don’t pay anything else to the airline, just the subscription. So it’s very interesting to see how people are adopting this. It’s a new product, just a couple of months in the market. So we can see people having a relative that lives in, for example, Los Angeles, and they go visit him or her. So they don’t need, a place to stay. They don’t need a fixed reservation, just that they need a day to go, a good price, or they have a girlfriend in Colombia or Peru. You can’t afford to travel 20 times per year. But with this product, you can fly many, many times as long as you have a little flexibility, because maybe you cannot fly on Monday, but for sure you will find something on Tuesday or Wednesday. It depends on the date, on the route. Or if you were to go to the beach, maybe Cancun is not available, but you can go to Puerto Vallarta. Again, if you have flexibility, it’s a great product.

10:35 GLO: That’s quite interesting. One of the biggest advantages of loyalty programs has always been having the history data and vintage data of the person’s traveling, the customer traveling. Are you managing to integrate this valuable data and personalize the offering? We are seeing a GLO that some of the airlines are trying to do big data analysis, a little bit tap into Gen AI to be able to truly personalize the offers. Are you looking at these technologies?

Daniel Gelemovich: Yes, AI has been very quickly adopted in our business decisions, especially for customer service, for the chatbot, the agents who have quick access to content, to summarize, to translate. But also, the data strategy needs to tailor the offer to different segments. So we are currently and actively looking into this, advancing very quickly.

For example, when we have these loyalty programs – another one that we have is VPAS. For example, VPAS, it’s like a membership in that you get a flight every month for a very cheap price that you prepaid. So you get 12 flights per year with this product. If we see that somebody that used to travel to a certain destination every month, it happens that it has been 2-3 months that he is not using the products, we think he might churn and we might be about to lose this client and he won’t renew the subscription because maybe he’s not finding the right time or we don’t exactly know why. So with the data, with the GenAI, we can extract the information that, depending on the segment, when we are about to lose him, and then contact him a little time before to say “Hey, you didn’t find the flight, we will guarantee that you can use the next flight, just tell us what you need and you will use the product. If you don’t find the destination, we will find a spot for you”. We are trying to deploy these use cases to detect the necessities and reach them before we lose them or maybe just to attract them.

13:07 GLO: It is truly “predictive analytics”. Now moving on to partnerships. One of the very interesting things about Valaris is that you have a partnership with OXXO, the largest convenience chain in Mexico, but also present in other markets, Brazil, and Peru, with 21,000 stores. That’s a unique and big value to both sides because you guys have cross-pollination. How that one is going? OXXO is trying to expand into Europe. Are you going also to benefit from that? And how do you approach your partnership ecosystem?

Daniel Gelemovich: Yes, we launched a new partnership with OXXO stores. It’s very interesting because we have a very similar target and it makes a lot of sense. It’s very unique in the sense that you can go to the retail store to buy milk or sausages and then exchange them for your payment at an airline. So you can fly if you buy enough food at OXXO – you can fly to Cancun for free or you can use it not just for the airfare, you can use it for part of the airfare, you don’t have to pay the total price or the total ticket. You can pay for the seat or any ancillary. So it’s very easy to use. It goes the other way around also. If you buy a ticket with Volaris, then you get points for the convenience store. So you can fly and then you can have the meal at the airport before the flight for free because you purchased with the accumulated Spin points. It’s called Spin and the program will add other members in the future. But it made a lot of sense.

Regarding Europe, our fleet is aligned with a low-cost model. So we have eight A320s, A321s. We fly short-range flights – 3-5 hours the most. We are one of the largest carriers outside the US bringing traffic to the US. We dominate the Mexican market. We have operations in Central America and recently we expanded to South America, Peru, and Colombia.

15:53 GLO: Daniel, very interesting, you mentioned earlier that effectively your initial competition was with the bus companies. What we are seeing across Europe is the renaissance of multi-modal partnerships. Airlines partnering with rail operators or bus operators and providing the full journey. Is that something that happening in Mexico too? Would you ever consider that or you treat bus operators as competitors?

Daniel Gelemovich: Both. We see them as competitors but we are also going into multi-modal for cities. For example, if they don’t have an airport, we fly to the nearest airport and then you can take the bus to the final destination. Or there are airports in Mexico that are in the metropolitan area, you can go to one airport and then take the bus to the other one, things like that. But yes, we see the same in the future using multi-modal alliances and transportation to get our customers to the final destinations quicker. 

17:00 GLO: One thing we noticed about Valaris is that you front and center highlight your sustainability efforts and values. It’s very honorable. What do you think from the standpoint of the airline and customer, is it a push from the airline to customers or it’s a customer demand to see airlines to be more sustainable? Who is the leader in this trend?

Daniel Gelemovich: I think both. In Europe it’s different, and I think the customer is more aggressive, demanding consciousness about being green. But it’s getting everywhere. I see aviation in 10-20 years moving very quickly into being more sustainable. We see airlines already experimenting with the prototypes of functional electric planes. I’m sure soon there will be also available for larger scale passengers and hybrid-like batteries operating with fuel. We’re gonna move that way into greener aviation. You will see the IATA going into less emissions, into zero emissions.

We are a low-cost, and we are in a unique position. For us, the cost is very important and to maintain it low. What’s the biggest cost of operating an airline? Many will think the aircraft. It’s not the aircraft – it’s the fuel, as the fuel is the largest cost for the airline. So by nature, we want to reduce fuel consumption. It’s part of the business model.

We incorporate lots of technology and investment for doing this. For example, we have sharklets on the wings that will reduce fuel consumption. It’s more expensive to buy the sharklet, but it’s an investment low cost will gladly do. Or for example, we have the new engines. They will, depending on the use, have 10% less consumption and less noise going into the new models.

And of course, in the past, some segments of customers found maybe uncomfortable to have less space between sitting rows in low-cost airplanes. It’s smaller, right? But now it’s an advantage because as you can transport more passengers into the same plane, you become more green and you emit less fuel per passenger. So now you can see, for example, in Google flights, they are incorporating not just the price and time to destination, but also if you will emit less CO2 to the environment. And Volaris as a low cost is always at the top and the best-performing airline because now it’s an asset to transport more passengers in the same plane to be more conscious of the environment. So it’s interesting how things will change. So I think to round up, it’s both that the customer wants to fly in a green airline and green transportation in general and the airlines also want to go in that direction. So it’s creating a virtuous circle that’s promising a greener future.

20:53 GLO: A greener future is what we are all looking for. At the end of the interview, if you permit 3 blitz personal questions, just to know more about you as one of the experts in Latin American aviation if you had one million miles and you could travel anywhere you want, however you want, how would you spend them?

Daniel Gelemovich: Yeah, for sure. I will travel to places I have never been before. I would love to go to Asia, to Australia, for sure. Eastern Europe will be there in my interest to find out new cultures, new destinations, and new ways of doing things.

21:33 GLO: If you’re the head of the technology digital channel department, if you had a magic wand, and you could add to your Volaris proposition any feature, regardless of the cost immediately, what that would be?  

Daniel Gelemovich: That’s a good question. I think I will choose probably biometrics. I think it makes travel safer and quicker for the customer. It streamlines the process. If your face is the key to your access, your boarding pass, and your ID, then you don’t need to be caring or you cannot lose your boarding pass. The gates will open automatically when they say it’s you. And I think it also will increase security. A big problem in Latin America is the traffic of children, of teenagers. We participate in the ECPAT program and we have an internal problem, which is called “Eyes in the sky”, where we try to avoid the traffic of persons. So it will help a lot in that way also, which is very important for us to be responsible in that way.

23:00 GLO: And the last question, if you permit. With your experience, now looking back, if you could give us one piece of advice to young Daniel just starting in the airlines and customer experience industry, what that would be?

Daniel Gelemovich: I will say to him and the new Daniels, be comfortable taking risks. It’s very important. They will hear many times in their career that it’s important to innovate and to be a pioneer. But it comes with risk. So you don’t have to be afraid of taking those risks, you have to measure them, you have to know what are you doing, be conscious of the risk, detect them, and then detect if something’s going wrong, and then be able to adapt and deploy quickly and iterate and learn from the mistakes. But it’s part of our culture. You need to cultivate that.

23:57 GLO: Yes, thank you so much. It’s one of the goals of Global Loyalty Organization to help companies innovate and satisfy the evolving customer demands. Thank you so much for your insights. We’re looking forward to meeting you again at the World Aviation Festival or other events. And looking forward to innovation from Volaris.

Daniel Gelemovich: Same. Thank you.

Source: GLO