In September, Guestlogix (TSX:GXI) acquired Initium Onboard, a United Kingdom-based provider of on-board retail technology to the airline and rail industries. With the acquisition, Guestlogix gained added four rail clients to its roster of airline partners.
Today, Guestlogix announced it is launching it Global Rail Division. The company says it sees “significant” potential for new revenue in the space.
CEO Brett Proud says the timing to being Guestlogix’s traditional airline offerings to terra firma is right: “The launch of our global rail division comes at the perfect time within the company’s history as we have an exceptional level of talent gained through Initium Onboard and are well positioned to replicate proven success from the airline industry,” he said. “Europe represents the world’s largest rail market and sets the global benchmark for the industry. This newly formed division, under the leadership of Mr. Thomas Drohan, SVP and GM — global rail, will initially focus on expanding Guestlogix’s rail customer base in Europe and will subsequently penetrate the rail industry worldwide.”
Guestlogix was formed in 2002 and has since become the dominant player in the business of delivering ancillary revenue to airlines, with contracts to service more than a billion trips annually. Guestlogix management points out that all little extras; a fee for your second bag, a surcharge for reserving your seat in advance, are actually saving the industry, producing close to $60 billion in revenue last year. Without this ancillary revenue, the airline industry would still be a losing game. Guestlogix’s revenue has grown from just $5.43 million in fiscal 2007 to $22.8-million in 2011.
Management says the opportunity in rail is so great, it could eventually surpass the revenue it generates from airlines. It pegs the value of on-board ancillary revenues in rail at $25-30-billion.
At press time, shares of Guestlogix were down 1.2% to $.84.