Private equity firm TA Associates has completed an investment in Plusgrade, a provider of revenue solutions to the travel industry. Financial terms of the transaction have not been disclosed.
Founded in 2009, Plusgrade helps airlines manage and optimize revenue generated from seat upgrades and other premium services. Through the company’s proprietary software-as-a-service platform, airlines are able to capture incremental, high margin revenue from unsold inventory and enhance the passenger travel experience. Plusgrade’s products are fully white labeled and integrated into existing airline reservation systems. The company serves more than 35 premier airlines globally and has established its market-leading position by focusing on customer service and innovation. Plusgrade has offices in Montreal, Canada and New York.
“We are very pleased to have TA Associates as an investor and to welcome them to our Board as we enter this next phase in the evolution of Plusgrade,” says Ken Harris, Founder and CEO, Plusgrade. “Ancillary revenue and merchandising is now a key component of every airline’s core strategy, and with the aid of an experienced investor like TA, we are confident we can continue to innovate, lead and build upon the meaningful revenue streams and enhanced customer experiences for which our signature solutions are known.”
“Plusgrade’s robust solution for generating incremental revenue from existing passengers has proven very attractive to air carriers,” says Jeffrey A Del Papa, a Principal at TA Associates who will join Plusgrade’s Board of Directors. “Plusgrade has had significant growth and momentum, expanding relationships with existing partners and signing additional airlines at a rapid pace. With a strong value proposition and an appealing model that requires no capital investment from its customers, we are enthusiastic about Plusgrade’s continued growth prospects.”
Consulting firm IdeaWorksCompany estimates that USD49.9 billion, or 6.7 per cent, of global airline revenue came from ancillary revenue streams in 2014, up from USD22.6 billion in 2010. In addition to premium seat assignments, ancillary revenue sources include additional offerings such as early boarding, checked baggage and commissions from hotel bookings and car rentals.
“While experiencing overall growth, the airline industry remains cyclical and carriers continue to seek opportunities to enhance their profitability and margins,” says Kurt R Jaggers, a Managing Director at TA Associates who will also join Plusgrade’s Board of Directors. “As a result, airlines remain focused on finding additional opportunities to optimize revenue. With upgrades and other ancillary offerings typically yielding margins greater than those from ticket sales, we expect to see continued demand for the types of products and services that Plusgrade provides.”
“We are thrilled to be backing Ken Harris and the leadership team and employees at Plusgrade,” adds Jason S Mironov (pictured), a Senior Vice President at TA Associates who will also join Plusgrade’s Board of Directors. “The team has done an impressive job establishing Plusgrade as a market leader, and we look forward to supporting the company through this next phase of expansion.”