A couple of teenage entrepreneurs meet at university, fresh from their first exits.

They team up to try some ideas, and end up partnering with an airline on the beginnings of a new traveltech startup.

That’s the origin story of today’s startup, Arcube. Read on to find out more

– Martin

Arcube thinks it has a smarter way to boost airline revenue

If you’ve ever bought a travel product online, you’ll know about the upsell page. 

You know, that bit when–whether you’re booking a flight, a train journey, or some accommodation–you get the option to book upgrades like extra legroom, lounge access, or a hire car.

Airline ancillary revenue is a growing market, worth in excess of $100 billion a year.

But Arcube is a startup that believes the market could be bigger if only airlines could better target offers at customers. Rather than show the same offers to everyone, Arcube’s tech is designed to draw on each customer’s previous booking data to personalise the offers they display.

In addition to pulling in more revenue, the idea is that personalised offers will lead to happier customers.

“About 20% of an airline's revenue comes from selling these ancillaries. However, currently, given how airlines’ data is structured and managed, they cannot reuse that ancillary purchase data. So they miss out on a huge opportunity to use customer data to upsell you things that you like,” says co-founder and CEO Prithveesh Reddy.

How it works

The software plugs into airlines’ existing data sets to draw on information like past flight destinations and bookings, previously purchased ancillaries, along with data about the current booking such as which class you’ll be travelling in.

This is used to figure out a customer’s preferences and likely spending power.

The airline can then display the most relevant offers, be they in-flight upgrades or things like hotels or car rental for when you reach your destination.

Reddy says that the same data can also be used after a flight to help boost customer loyalty.

“There's a misconception that an average passenger can never really earn enough points or miles to do anything meaningful with it, so people don't generally bother to sign up to an airline loyalty program.

“So we allow passengers to instantly convert whatever miles that they earned on their flight into a tangible ancillary which they can use with a  future booking. So when I get off a flight I can take whatever miles I've earned, and convert that into something like a priority check in, or expedited security, which I can save for my future booking.

“That way I have a meaningful reason to come back to that particular airline.”

The story so far

Reddy and his fellow Arcube co-founder Harvey Lowe grew up in India and on the Isle of Man respectively. They were both teenage entrepreneurs prior to meeting.

“We started separate businesses when we were 15 or 16,” says Reddy.

“Mine was an academic consultancy helping high school graduates get into universities and the UK and US, and Harvey had a health ecommerce store… we sold those businesses and had very small exits through them.”

The pair met through Accelerate ME, a startup programme run by students at the University of Manchester.

They started Arcube as first-year students. As suited the time, it was initially an agency helping brands explore the blockchain space. This included, Reddy says, helping a Formula One team create a concept for a blockchain-based racing game, along with an NFT collection of 3D aeroplane models for Etihad Airways.

It was the Etihad collaboration that led them to come up with Arcube’s current direction, which doesn’t use blockchain tech at all. Reddy says Etihad is currency using an MVP version of the product. Details of this collaboration are on the startup’s homepage.

Reddy and Lowe graduated from university last week and are now devoting their full attention to Arcube.

Their first priorities are developing the MVP into a scalable product and to start working with more airlines. 

Reddy says they’re in conversations with 14 airlines and want to move them onto signing letters of intent so the startup can begin to onboard them as soon as the product is ready.

Subscribe to Premium Membership to read the rest.