linked in facebook twitter rss

  • Interbrand
  • Brandchannel

your chance!
your chance!
Also of Interest...
     
  Lizzy Stallard The Role of Branding in the Airline Industry
by Lizzy Stallard
September 10, 2007

In the airline industry, the role a brand plays in driving demand is somewhat untraditional. Functional factors such as price, routes, and schedule are always key considerations that impact the purchase decision. This is true even in circumstances where a customer is brand loyal—whether it is because of brand experience, or more likely, those air miles. This then begs the question: Exactly what role can brands play in driving value in the airline industry?

What we are witnessing at the moment is airline brand stew. We are seeing an influx of new offerings ranging from low cost carriers to premium business/first class only, and everything in between. With so many more options on the market, the boundaries between the traditional airline categories and the actual brands are becoming blurred.

At one end we have the low cost carriers. The first major entrant to the UK market was Ryanair in 1985. For such carriers, lower ticket prices, functional benefits, and schedules were at the crux of their appeal. It was all about getting from point A to point B as quickly and efficiently as possible, and at a fraction of the cost of the other providers. EasyJet is another example where everything oozed value for money, down to the advertising and brand communications, which even looked a little cheap to help drive home the message of “no frills.”

What is interesting with these players is the dilemma of the anti-brand. This is based on the belief that selling the anti-brand concept packaged up as an obviously fleshed-out branding campaign might undermine the promise of truly offering great prices. Building a brand would suggest that money is being spent elsewhere, when the idea is to offer a bare bones approach that ensures customers gain maximum benefits from a minimum pricing structure.

 
 

The interesting result is that easyJet and Ryanair became brands, even if that wasn’t their intention at the offset. Naturally, the functional benefits of price and schedule are evaluated according to important customer perceptions regarding monetary value and reliability of service. So the players are already starting to ladder up to something beyond the simplicity of a cheap ticket. And then guaranteed low prices and reliability in turn start to build trust, loyalty, and confidence. Is anyone starting to see the roots of a brand idea taking hold? Exactly.

Low cost carriers now have significantly powerful brands that must be nurtured for future growth. And, many of the key players are building on this opportunity and gaining momentum in terms of brand extensions. Ryanair is a perfect example, having recently announced intentions to open a chain of Ryanair hotels. Some actually predict that in the future the cost of the airline ticket will be free, and profits will be garnered from all the other brand extensions that these companies have invested in. So, that is certainly motivation for these players as they continue to innovate their brands for the future market.

Each of these brands has developed from the exact same proof points of low cost, no frills, and effective scheduling. Consequently, this commonality of proof points makes differentiation a huge challenge. That said, when comparing Ryanair and easyJet, the former has managed to gain the upper hand in terms of elevating the debate beyond a purely price driven benefit.

The US-UK Open Skies agreement, which begins in April 2008, will bring with it a slew of opportunities and challenges for the low cost carriers. Some audiences will certainly be skeptical of the degree to which the “no-frills” concept will stand up on longer journeys. This again supports the thought that these brands need to continue to consider how to shift beyond no frills to ensure that audiences are confident and comfortable when embarking on these longer flight paths.

The role of brand in the world of low cost carriers is important, but these brands must operate at a functional level and encourage that all-important emotional connection between consumer and brand. This in turn makes building brand loyalty particularly challenging, and therefore we continue to see consumers switching among carriers, with price remaining the key decision criteria. Understanding that price will always be at the core with these players means there is an opportunity for these brands to add more dimension to the value for money concept. This increases the bond with consumers. It could also grow more branches on the brand extension tree and help increase differentiation between brands.

At the other end of the spectrum of airline offerings, we have the relatively new and fast growing wave of the first class/business class only jets. MaxJet, Silverjet, and Eos are the main players in the sky at the moment, with the certainty that more will follow. While on paper these brands offer the same service—first or business class only flights—the experience is actually quite different.

Eos leads the skies in terms of quality of offering, and so naturally also tops the list in terms of ticket price. But, to this particular demographic the functional criterion of price isn’t the deal breaker. There are some more functional criteria that do, and always will, impact the purchase decision, such as flight schedules and check-in times (Eos allows a 45-minute prior to take off check-in time, very appealing for the time stretched business traveler). But with a higher ticket price we start to see those little extras that create differentiation, that, if well tailored to the exact needs of the target market, start to influence brand loyalty. With Eos, it really is about the experience across all the brand touch points—from the free airport limo service, curbside greeting, security chaperone if you are running late, fancy lounges and showers, to the premium on-board experience. And, the fact that all this is available at a significantly lower price than a first class ticket on board the traditional long haul carriers is really the icing on the cake.

Providing a more experience-driven approach creates a bigger window of opportunity to establish a bond with consumers and create a real reason for them to come back. The role of brand is stronger for these players, but the true challenge will be how brands remain differentiated among the already quickly growing field of “budget premium” airline brands.

One thing to note is that there does not appear to be a clear leader in this category yet. There is still an opportunity for these players to bring their brands to life, to fully connect with their consumers and to demonstrate an unwavering commitment to the particular needs of their respective audiences. Given that the audience profile is more targeted in the case of the premium class only brands, this should be a relatively easy task to accomplish. This is in sharp contrast to the legacy carriers, who are still faced with the reality that at one end of the plane they have the GBP£ 8,000 (US$ 16,124.00) business traveler, and at the other end, the GBP£ 300 (US$ 604.00) holiday maker.

This brings us on to the next group of airline players, the legacy carriers. The mass of activity both in terms of low cost carriers and premium class only offerings certainly poses significant challenges for these players. Just a few weeks ago Sir Richard Branson announced that next year will see the arrival of a new elite business class only offering from Virgin. Its biggest rival, British Airways, has also announced plans for a similar service. The question will be determining how these services from established brands will stack up against the new players. Functional aspects such as corporate accounts and mileage programs are certainly on the side of the legacy carriers. And, these are also extremely strong brands in the eyes of consumers. We all have functional expectations and emotional associations with a brand like Virgin, a brand that we have to some extent grown up with. The same cannot be said for the newer all-premium class offerings, which have yet to truly establish themselves in the minds of consumers.

So the role of brand has implications for all the players along the spectrum, but each to varying degrees. Low cost carriers need to “dimensionalize” the price promise to try to shift the brand beyond a primarily functional benefit to the consumer. This will help build brand loyalty, allow opportunities for differentiation between players, and enhance brand extension opportunities.

The niche all-premium class players need to differentiate. We are seeing new entrants arriving thick and fast and in order to truly break out from the rest of the pack, the consumer needs a reason to choose one brand over another. It will be important for these players to act fast, before the BA and Virgin heavyweights introduce their offerings in 2008.

And, lastly, what does this mean for our legacy carriers? We certainly are witnessing these carriers getting squeezed from both sides. However, in terms of brand strength and awareness, this is where the traditional players have the upper hand. New entrants can hit the market, improved gadgets can enhance the service, prices can be lowered, but the one thing that the new players cannot win on is brand strength. The legacy carriers have the advantage of time on their hands. New entrants to the market may grow to become established brands, but this takes time. In the case of the all-premium offerings, customers have diminished familiarity with their advantages. Also, these brands are faced with the task of attracting customers.

So the role of brand is important in the airline industry, and there is still room for airlines to think more like brands and less like operations. Amongst the airline brands, there needs to be a deeper understanding of the power of their intangible assets. By recognizing their potential strength, these brands can break out of the clouds and truly fly high.

 
   
   Lizzy Stallard is a new business consultant at Interbrand.



 
 commenting closed Add Social Bookmark bookmark  print
 suggest topic  recommend ( 185 )  email

The Role of Branding in the Airline Industry
 
 
Brand counts.Be it for the full-service airline or the ones for budget travellers.The bottomline is, each operates within its own segment of the targetted audience what they can do to provide consistent excellent experience.Not only the punctuality of flying time, but also the inflight experience experience and what comes with it.And what is so diffifult for the no frills airlne to venture into the long haul flights? Nothing.It takes lots of creativity to stay afloatEven if an established airline has time on its side, it has to fight harder these days to make impressive differentiation in the crowded market. 
abby aseeny, creative director, freelance creative director - September 12, 2007
 
 it is a fantastic article, in which the principles of branding and applications of branding have been articulated, in a industrial perspective... I will recommend it to my friends... 
Danny, GM - September 18, 2007
 
  brandchannel brandspeak archive   2014  |  2013  |  2012  |  2011  |  2010  |  2009  |  2008  | 2007  |  2006  |  2005  |  2004  |  2003  |  2002  |  2001
 
 
Dec 31, 2007 Batch and Blast Emails: Killing Your Brand and Polluting the Environment -- Sheldon Gilbert
  Why behavioral targeting is a habit to focus on.
   
 
Dec 17, 2007 Brand Differentiation Doesn't Cut It Anymore -- Ted Mininni
  Brands can set themselves apart by looking inward.
   
 
Dec 3, 2007 The Science and Art of Design Architecture -- Leigh Bachman
  Smart designs break the mold, not brand equity.
   
 
Nov 19, 2007 The Big Switch: Brands Follow the Indian Customer Online -- Preeti Chaturvedi
  How does India mesh technology and tradition?
   
 
Nov 5, 2007 Strong Brands Support Strong Reputations -- Debbie Myers
  Healthcare gets the branding bug.
   
 
Oct 22, 2007 Marketing a Franchise Brand -- Karyn Kozo
  The forest and the trees of franchise branding.
   
 
Oct 8, 2007 Don’t Be Shy About Conversational Marketing -- Brian Carpizo
  Getting to know customers can make companies self-aware.
   
 
Sep 24, 2007 Keep Your Brandwagon on Track -- Karl Treacher
  How to balance your brand and the interest of others.
   
 
Aug 27, 2007 The Greenrush: Eco-branding -- Dr. Arlo Brady
  Does the greenrush mean eco-branding is gold?
   
 
Aug 13, 2007 Connected? -- Abram Sauer
  Can blogging tips result in the tipping point for brands?
   
 
Jul 30, 2007 Phone SPAM? -- Lane Michel
  Is direct advertising on mobile phones a savvy marketing technique or simply SPAM meets cold-calling?
   
 
Jul 16, 2007 The “St. Peter’s” Brand Sparkles While Other Brewers Droop -- Tom Blackett
  Can branding inspire Britain, and the world, to develop a taste for British beer?
   
 
Jul 2, 2007 Rascals Rudiments: Kids Getting Bolder Younger! -- Nic Jones
  Are children truly "older" than they were a generation ago? Not necessarily, but brands should be aware of what today's kids are up to.
   
 
Jun 18, 2007 Slam-Dunk Your Way to Brand Loyalty -- Chrissy Toeplitz
  Using the Internet, a brand can develop a memorable campaign—a "slam dunk"—to attract customers and cultivate loyalty.
   
 
Jun 4, 2007 Five Avoidable Marketing Mistakes When Taking Your Brand Global -- Susanne Evens
  Launching a local brand into a wider marketplace requires several considerations.
   
 
May 21, 2007 Brandjacking -- Ted Mininni
  Brands that ignore Internet-based threats do so at their peril.
   
 
May 7, 2007 The Value of Vertical Search for B2B Marketers -- Jeffrey M. Killeen
  A true vertical search engine is based on three fundamental principles.
   
 
Apr 23, 2007 The Search for Soul -- Bernard Leibov
  Exploring the parallel quests for personal and brand identity through the lens of Buddhist thought.
   
 
Apr 9, 2007 Brand Phobia: How to fight your personal brand demons and win -- Lyn Chamberlin
  Personal branding: less fear and excessive modesty, more self-realization and storytelling.
   
 
Mar 26, 2007 Aston Martin: Stretching 007 to 479 million pounds -- Vincent Grimaldi de Puget
  As Ford sells its Aston Martin brand, what should the new owners do to preserve its equity?
   
 
Mar 12, 2007 Emerging Media: Welcome to the evolution -- Jeff Ramminger
  B2B brands should take advantage of blogs, podcasts, and other Web 2.0 technologies.
   
 
Feb 26, 2007 The 2012 Olympics: Location, location, location -- Tom Blackett
  The 2012 Olympics will be held in London—but where in London? The answer could make a big difference for branding the event and the city.
   
 
Feb 12, 2007 A Look Ahead—Casting Online in 2007 -- Angela Hribar
  The increase in marketing opportunities in 2006 was no anomaly. Brands should continue to fish the online waters to hook new customers.
   
 
Jan 29, 2007 Branding the American Idol Way -- Mary T. Morgan
  What can a hit reality-television show about a singing contest teach us about branding?
   
 
Jan 15, 2007 Old-Fashioned and New Virtues for Global Branding -- Jürgen Häusler
  Successful branding requires bold vision, not caution. (In German.)
   
 
Jan 1, 2007 iDrive to iPhone, the Next Big Thing in Life: Realizing the potential of your consumer brand -- Vincent Grimaldi de Puget
  Richard Branson sets the bar for brand expansion with Virgin. Other consumer-oriented brands should follow his example.