The servitization of the economy and the subscription or monthly payment model for the enjoyment of any type of product or service is taking hold in all sectors. The airline industry is no exception, and with the recovery of tourism after the pandemic crisis, a new revenue stream for the travel industry is exploding: airline subscriptions. Behind this new business model is the technology developed by a Barcelona-based company, Caravelo ---formerly ChangeYourFlight---, which has just received a strong boost with the financial support of two of the city's leading investment firms: Sabadell Venture Capital and Inveready.
Caravelo, however, had previously attracted the interest of important investors and entrepreneurs such as Javier Pérez-Tenessa, founder of eDreams; Alex Cruz, former CEO of British Airways and Vueling; and Adara Ventures. Now, Inveready and Banco Sabadell, through its vehicle Sabadell Venture Capital, have provided three million euros to the company, adding to the 2.4 million raised so far.
This funding will be used to boost the airline flight subscription platform, which has become the company's flagship product, with growth expected to quadruple by the end of the year. "We have been pioneers in developing a subscription model for the commercial aviation sector and we aspire to consolidate ourselves as leaders in this business, which is generating spectacular interest from airlines," explains José Luis Vilar, co-founder of Caravelo.
The startup, which also has Iñaki Uriz as a founding partner, began its activity in 2015 and specialized in the development of technology and software for the air and travel sector, with the launch of multiple solutions aimed at increasing company revenues and operating more efficiently. However, after the pandemic, Caravelo has emphasized the world of subscriptions, that is, encouraging airline customers to opt for paying a monthly fee in exchange for receiving a series of benefits, such as the right to enjoy a free flight every month or access to a discount program or advantages over other passengers.
"Each airline designs its own model of benefits associated with a subscription; our platform integrates into their booking engine to manage these programs, as software as a service (SaaS)," explains Vilar. According to the entrepreneur, the subscription model allows airlines to increase sales, boost loyalty, and substantially reduce the cost of acquiring each customer, in addition to generating important data that can also be monetized.
According to Caravelo, its revenues derived from this product have doubled in the first half of the year and are expected to quadruple by the end of the fiscal year. "Last year the industry finally realized the power of subscriptions and we have seen a marked increase in the number of airlines that are working with us to implement these types of programs," explains Iñaki Uriz.
One of Caravelo's clients is the Mexican low-cost airline Volaris, which launched a subscription program in 2018. "In March of this year, the program reported a 95% increase in users compared to the previous year and a revenue volume 105% above pre-pandemic levels," states the technology company.
Headquartered on Diputació Street in Barcelona, Caravelo currently employs 45 people and works for airlines such as Volaris, Viva Air, and Alaska Airlines; it does not yet have any Spanish airline as a client, but they hope to reach an agreement "soon."