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.