SimpliFlying

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Although American Airlines posted a $45 million profit in the last quarter, it was only the sale of a financial advisory unit that kept them in black. Otherwise, they’d have lost over $300 million in one quarter. But why? Shouldn’t all those charges for anything that’s not attached to the plane helping boost profits? Apparently not. Since the fares themselves are not just low, but utterly unrealistic and unsustainable.

Shocking prices!

Here’s an shocking discovery I made while searching for fares on Vayama.com. The fare for a JFK-Singapore flight is $800.20 (on Cathay Pacific), and from Boston - JFK - Singapore is $807.20 (on AA + Cathay Pacific). That means the flight from Boston to JFK is merely $7! That is less than the price for a person to get from Manhattan to JFK by subway! Even a regular bus ticket from Boston to New York City is $15. See the screenshots below for yourself.

Search results for JFK-SIN

Search results for BOS-JFK-SIN

How is this possible?

Even though both American Airlines and Cathay Pacific are part of the OneWorld alliance, and cooperate on this flight and have revenue share agreements, how is it possible for the fare to be so low? Is American Airlines really charging only $7 for this ticket? Or is Cathay Pacific or Vayama footing the difference between the regular Boston - JFK fare? If not, then such fares are totally unsustainable and probably the cause of many airlines’ downfall. It is here that the belt needs to be tightened, not by charging $2 for a cup of water!

I personally don’t have an explanation for such fares, but if you do, please share your thoughts in the comments section. I (and my readers) would love to be enlightened.

P.S: I generally don’t digress from writing about branding for airlines, but just couldn’t help deviate here towards the pricing side after my discovery online.

Patrick Hanlon

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“Airlines need to have more of their staff smiling in their interactions with passengers, to make them feel comfortable. All we need is a little empathy.” That’s one of the tips Patrick Hanlon shared in my chat with him yesterday, on how airlines can build stronger brands to weather this crisis better.

Patrick, the Founder and CEO of Thinktopia, has been a marketing practitioner for over 20 years. His book Primal Branding: Create Zealots For Your Brand, Your Company And Your Future was named “Best Read 2006” and recently chosen as one of the “Top 10 marketing reads” by Britain’s Drum magazine.

Brands as belief systems

In his book, Primal Branding, Patrick emphasizes the importance of brands as belief systems. In his interview, he gives the example of Apple, Nike and Harley Davidson as brands that have built a level of fervor around them that’s difficult to emulate. But it can be done.

Patrick shares ways in which airlines can get employees and customers to rally around the brand in difficult times, and practical ways in which to build a belief system. The key, he believes, is the “pick” concept.

Flyers need to “pick” the airline

Recently, Patrick had written an article in Advertising Age magazine, on how traditional “push” and “pull” strategies have lost their edge with consumers and marketers need to focus on the “pick” factor. The concept essentially revolves around creating such a compelling product and service experience that the consumer is forced to “pick” your business over the competition.

Patrick feels that airlines should embrace the concept of “pick” surprise. For example, if there is no food being offered on the flight, offer an apple. May be offer McDonalds vouchers for later use. But basically create an element of pleasant surprise to enhance the experience.

Listen to the interview below, to hear Patrick’s thoughts on everything from why smiling flight attendants can mean cash for the airlines, and how airlines should take care of their brands post-merger. Feel free to share your thoughts too. Patrick feels that the brand is more important than the product, regardless of the economic environment. Is he right?

My prediction last month that Virgin Atlantic, one of the world’s leading long-haul airlines, is not on the brink of collapse seems to have proven true. The airline recently announced its financial results - which turned out surprisingly positive, given the tatters the rest of the industry currently is in. Premium passenger numbers were up 22% and profits up a whopping five times compared to the previous year. So I decided to speak with their VP of Corp Comms, Paul Charles (a former BBC TV and Radio presenter!). Here are his responses to questions about how Virgin Atlantic is dealing with the industry crisis so well.

Beating the current crisis

How has the current Wall Street crises affected Virgin Atlantic, especially load factors on London-New York flights?

Load factors have actually not dropped, thanks to Virgin Atlantic’s advance planning - we saw this coming two years in advance. New plane orders were deferred, bank balance was bolstered over time and the latest earnings have only demonstrated the sound planning further. Moreover, the fact that Virgin Atlantic is a long haul carrier has helped too, since it’s the short haul business that tends to suffer more in times like these.

How are the corporate deals that Virgin has negotiated holding up?

Unlike a number of other major airlines in the region, we do not rely heavily on financial institutions for our corporate accounts. The diversity in our corporate customer base has allowed us to weather this crises much better than our competition.

How important is the Virgin Atlantic Flying Club as a structural anchor to keep business travelers, especially in this climate?

We find that our most loyal business travelers are those who have benefited from being part of our award winning frequent flier program. They not only love the privileges, but also appreciate subtle conveniences like “Limo to lounge”, where they are able to go straight to the business lounge after arriving only a short time before the flight, while we take care of all their check-in formalities. This is a service also available to our Upper Class passengers.

Succeeding in the future

Do you think airlines with a stronger brand equity will come out stronger from the crisis? Why?

Certainly. Customers will stand by the brand that they trust, and that gives more stability to the business for an airline like Virgin Atlantic.

What do you make of the emerging business models in aviation, where airline conglomerates like AirFrance+KLM, BA+Iberia+AA and Lufthansa+Swiss are sprouting up?

We feel that although coordination between carriers is an emerging reality, it’s the markets that they target that’s key. For example, BA+AA is something we are vehemently against, since they would effectively own over 60% of the London-New York market share. In fact, even more, if you consider other US East Coast cities like Boston. This is not good for the consumers, and not good for competition in the industry. We are hoping that the authorities would look into this matter seriously and prevent this from going ahead.

Is Virgin Atlantic likely to go down that road too (collaboration)?

We are certainly open to the idea, and would consider seriously if an opportunity for a mutually-beneficial partnership comes along in the future and something that benefits all customers.

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Note: This was meant to be a podcast, but the interview recording mysteriously vanished from my Windows PC. Hence, I’ve pledged to only use my Mac for all podcasts from now on!

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Rohit Bhargava is the author of a recently released book called Personality Not Included and also the blogger of the very popular Influential Marketing Blog. Recently, when he was asked “what is one brand desperately in need of personality?”, his answer (unsurprisingly) was United Airlines. Here is what he had to say:

The one that stands out for me simply because I travel a lot and live in a major hub is United Airlines. The amount of money they waste on “brand campaigns” is just staggering. Who in America hasn’t heard of United Airlines? No one. So why spend all this money to tell them who you are? They have so much potential to reinvent the way that they train their employees and that they use social media to allow people to have a more direct relationship with them. Sometimes I dream about getting them as a client because there are so many solutions that could make such a big impact on their brand. It’s uncommon to have a brand with that much untapped potential.

I couldn’t agree with Rohit more! Just look at their latest advertisements and you know that they’re trying to put lipsick on a pig. There is a huge disconnect between the picture they’re trying to paint, and the general consumer impression about the airline, which is formed by product experience, not just advertisements.

Talk is cheap!

In June, at a BrandSmart 2008 conference in Chicago, I had the opportunity to listen to and meet Dennis Cary, United’s SVP of Marketing (who’s just been promoted to Chief Marketing Officer). Though he’s an extremely talented professional, neither his speech about the latest premium passenger previlages nor his emphasis only on inter-continental First Class and Business Class resonate with the audience. Most of these audience were probably “cattle-class” domestic travelers who had to bear with long lines and long delays on the tarmac at United’s overcrowded Chicago hub. Similarly, the advertisements being aired to the average “six-pack Joe” do not resonate as well. United Airlines becoming is fast becoming one of those brands that we tend to gloss over, when we encounter any of their marketing efforts. So, what can United do?

Why is cattle class important? Because opinions matter.

Since United Airlines gets most of their revenues from premium passengers, it is probably logical to concentrate all their efforts (marketing or otherwise) on this customer segment. But what they don’t realize is that these passengers are small in numbers compared to those who travel in Economy Class. This means that more of these people are able to spread their opinions to others, and any marketer will tell you how important word-of-mouth is. So if a small number of pampered customers are keeping quiet (since they’re so busy anyway), and a large number of dis-satisfied customers are beating the drum about their experiences,  the overall result will be utterly negative. Hence, there’s a strong need for United Airlines to connect with their customers, premium or otherwise - as Rohit rightly points out. And how can they do that?

Get to know your customer, personally

United Airlines will only be able to communicate a brand image that is relevant and resonates with the customers if they understand their needs well. To do that, they need to interact with their customers, online and offline - as Rohit suggests. United doesn’t need to look to the likes of Singapore Airlines or Cathay Pacific to learn how to engage their customers. Right in their arena is JetBlue, which does a fantastic job of using the latest technologies to interact with their customers and engage them in a conversation.

Beyond using online social sites like Twitter and Facebook, United should also have people stationed at airport terminals to cater to customer needs. Once again, JetBlue was great at doing this by having staff stationed throughout their new Terminal 5 at JFK airport to help customers, since it’s only recently opened. Truly addressing customers’ needs exactly when they are in need would go a long way in building brand trust for United Airlines.

Employees as brand ambassadors

My only pleasant experience with United Airlines took place when I met a well-trained, fresh-on-board flight attendant. Such an experience seems to be a rarity these days, more so because of lack of training and welfare for staff, than anything else. I’ve been highlighting the importance of happy and well-trained employees often enough on this blog. When the staff if well trained, they become the ultimate spokesperson for the brand since they’re the ones who interact with the customer at every touch point - from call centers to the check-in counter. Having them believe in the brand and communicate it well can do wonders. Moreover, they can always be tapped upon for customer insights and feedback too. The essence of this lies in keeping them happy!

Rohit makes a good point that it’s “uncommon to have a brand with that much untapped potential”. I think the whole of US airline industry, with a couple of exceptions*, is full of brands with untapped potential. What do you think? Can the US airlines ever regain the former glory of the likes of PanAm? Is United really lacking a brand personality? Do you think Rohit is right? Let’s hear it in the comments section…

*I feel the couple of exceptions are Southwest, JetBlue, Virgin America and Alaska Airlines.

Related articles

• United Airlines to Customers: Screw You
• How United Airlines screwed over an entire family
• United Airlines Boosts 2nd-Bag Fee to $50
• United to require minimum stays

Jet Airways employees protesting

Last week, Jet Airways in India fired almost 1000 employees (and then re-instated them after a huge furor). In bad times, it’s natural for companies to cut costs, and reducing headcount is one of the ways to do that. But it was the method of communication that infuriated employees and resulted in widespread public protests.

Just like airlines cannot treat customers badly, they cannot treat employees badly too. After all, happy employees make for happy customers, who then form positive impressions of their interaction with the brand. One of the most successful airlines in the world, Southwest, treats their employees like customers and the results are there for all to see. Here are a few things other airlines can do to keep employees happy, by treating them humanly.

No surprises, please!

Most of the Jet Airways employees were hardly given any notice of the upcoming lay-offs. They were informed either a day before they were asked to leave, or on the day itself, in some cases. The news came to them as a shock, especially from a company whose CEO has often preached a family-like culture (which was also used as a reason for reinstatement). When delivering a bad news, surprise is not good. There has to be ample notice, and key employee champions need to be taken into confidence before any such announcement is made. Moreover, a transition plan must be in place.

Come, talk to me

Even more important than the plans is the way the message is communicated. A number of Jet Airways employees received “pink slips” on their mobile phones via text messages. Some received emails.  That seems to be the absolute height of disregard for employee welfare. Not only did the employees felt detached and unloved, they felt like they were being kicked out of the company. It’s only natural to expect the resulting protests against the decision. Good communication is key to keeping the brand trust intact - just like dealing with customers. Such decisions need to be communicated face-to-face and in-person so that both parties have a chance to explain their side of the story well. Even if the employee has to be let go, he or she would understand well the reason for expulsion.

Employees are the most important brand ambassadors

In his book, “A New Brand World“, Scott Bedbury, talks about the value of brand alignment inside a company.”Though it is important to demonstrate consistently to the outside world that you know what your brand is about, ultimately, it is even more important to first demonstrate this internally…” Jet Airways has ambitions of being the “Singapore Airlines of India”. They have made good progress in that direction too.

Now, the important thing is to stay on that course and not allow glitches like these affect the brand. The importance of emplyees as brand ambassadors cannot be understated, and Jet Airways missed a trick with this employee sacking saga. Once brand trust is broken, it’s difficult to earn back. Hopefully the reinstatement of the emplyees will calm some nerves. But no one can tell the extent of the damage done to the brand right now.

What do you think? Although Jet Airways is a private company and has a right to hire and fire, were the employees treated right? How could the situation be better dealt with? How can other airlines do this better? Let’s hear it in the comments…

Related articles

• Indian airline reinstates 800 staff
• Air India mulls unpaid leave plan

Allen Adamson in his New York office

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“Successfully branding an airline is the ultimate branding test,” concluded Allen Adamson last Friday in his office during an interview with this blog. Allen is the Managing Director at the New York office of Landor Assosiates, one of the most respected branding firms and one that is heavily involved in airline branding globally. Landor has led brand strategy at heavyweights of the industry like Singapore Airlines, Jet Airways, Austrian Airlines, Delta Airlines and Japan Airlines. Allen is also the author of the recently published book, BrandDigital, which details how companies should leverage the latest in Web 2.0 to build their brands.

“The digital airline brand is all about execution”

office…………
“The execution has to be spectacular – online and offline,” Allen explained, when asked what is the key to building successful airline brand in today’s hyper-connected world. Allen believes that the internet acts as a magnifying glass for all business operations and achieving transparency is essential. “If you don’t reveal it, someone else will”, he added. He aptly mentioned SeatGuru.com as an example of a site that has taken advantage of this phenomenon, by revealing the best seats in the plane – something airlines could have done themselves. Allen believes that the internet should be tapped to understand customers better and address their needs in an interactive way - JetBlue being a good example of an airline that does this well.

The importance of internal branding

The other part of brand execution that matters is internal branding - something SouthWest is well known for. In in his experience in working with airlines, Allen has learnt that empowering the employees directly interacting with the customers to make decisions on their own cultivates happy customers too. Training them well and keeping them happy to ensure that they live the brand, and communicate the brand to the customers in every interaction is essential. In this regards, airlines can learn from brands like Disney and Nordstrom, both of which have successfully managed to filter down a consistent brand experience to every touchpoint.

Below, you can watch the full interview with Allen, who was gracious enough to grant us time from his busy calendar for this. Special thanks to Leonie Derry from Landor, who tirelessly worked to ensure that this interview took place.

So, what do you think? Is execution the key to an airline brand’s success, as Allen believes? Is survival more important than the brand, or do they go hand in hand? Let’s hear it in the comments section…

Related articles

• Allen Adamson’s blog
• Airlines may start treating passengers as ‘freight’
• Airline proves that small can be beautiful
• Airlines Add Service and Amenities to Asian Routes

SimpliFlying Buzz

Dear Readers,

Thanks for all your support for this blog in the past 9 months since we started. It gives me great pleasure to share with you that SimpliFlying will be launching a new micro-site, SimpliFlying Buzz, on Nov 10, 2008. SimpliFlying Buzz will be the first airline marketing and branding portal on the web, which will scour the web for the latest news, comments, reviews and articles around issues relating to airline branding.

Furthermore, the site will highlight quotes by key executives in the industry, and you’ll be able to browse through the site by selecting a specific airline and viewing all articles around it. The site will be powered by HiveFire’s revolutionary technology which automates these processes. Till November 10, we look forward to your continued support.

For your reading pleasure, here are some of our most popular posts till now:

1. Emirates A380 maiden flight coverage
   
2. Singapore Airlines, still a great way to fly? A brand analysis
3. Marketing guru reveals airline advertising secrets: in conversation with ISM’s Gary Leopold
4. Three reasons why Qantas missed a branding opportunity with A380
5. Why Virgin Atlantic Airways is not “on the brink of collapse”

Cheers!
Shashank

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India’s leading private airline, Jet Airways has just decided to sack 1900 employees following their wide ranging alliance with Kingfisher Airlines. The move is intended towards cutting costs for the carrier struggling with high costs in an unfavorable economic environment. But that’s stuff everyone already knows about.

Here’s something interesting I encountered this morning. A leading Indian news website, Hindustantimes.com carried the story of this sacking, along with pictures of protesting employees. Ironically, there was a Jet Airways banner advertisement placed right next to that news, introducing their new flights between Bangalore and New York (which also may just follow the San Francisco flight into oblivion). Be sure to check out this interesting post on another blog, with a similar issue about the A380.

Isn’t it so interesting? How do you think airlines can save their brands from such incidents like above? We all know that with the advent of online media and Web 2.0, it’s difficult to control consumers’ comments. But advertising on a news site like this - that can certainly be controlled, isn’t it? But how? Let’s hear your thoughts in the comments section…

Related articles

• Jet Airways ‘planning job cuts’
• Vijay Mallya aims to leave rivals in his vapour trail

Image by caribb via Flickr

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Innovative products and services - the key ingredient for strong brands - ooze out all the chart-toppers in Conde Nast Traveler 2008 airline rankings released recently. Last week, in an interview with this blog, Gary Leopold, the CEO of ISM Boston shared that “the product is the brand”. This certainly holds true for for the top few airlines in each category. Below, we’ve pointed out what the top two airlines in each category do right, that makes them so good.

Surprise! in the air

Before we get into what the to airlines do right, how about pointing out some surprises about this latest ranking? Interestingly, Singapore Airlines operates only one trans-Atlantic flight (Frankfurt - JFK), and yet they are in the top two airlines on this route. Even though they don’t use their latest and best planes on this route, the great brand leverage they’ve built for themselves continues to give them lots of mileage on this route.

Where are the US airlines? Bad product + Bad service = bad brand!

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The US airlines are glaringly missing from the international rankings, but even in the domestic US rankings, where are the biggies? Right at the bottom. Only Continental is in the top three, and Delta just peeks in at the fifth place. Where is United Airlines? Where is American Airlines? Where is Northwest Airlines? The fact that these airlines are missing further enforces the importance of having a strong product to build a strong brand in the airline industry. Will the US airline industry ever get back its mojo? We wonder… May be the rest need to learn from the upstart, Virgin America, which has topped the ranking in just one year!

Here are some rankings from the annual Conde Nast Traveler business-travel awards 2008:

Top Trans-Atlantic Business Class

Top Trans-Pacific Business Class

Top U.S. First and/or Business Class

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Emirates Airline has placed the largest order of the largest plane in the world. They will eventually have 58 A380s - one third of the total orders Airbus has received till date. Their first A380 that flew from Dubai to New York City on Aug 1, 2008 dazzled everyone with exclusive showers in the First Class and a plush bar for Business Class, along with an overloaded in-flight entertainment system across all classes. Luxury and novelty was the name of the game. But will this last?

Three questions for Emirates

1. Once Emirates has 58 of these double-decker planes flying around the world, will they still be able to maintain such high product standards across the fleet?
2. How will service consistency be ensured?
3. How will Emirates ensure that the right expectations are set among customers for A380s with different configurations?Emirates VP for the Americas, Nigel Page, doused our curiosity with his forthcoming replies on these issues.

Three A380 configs, Two types of aircraft, Single minded focus on service

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Nigel explained that “Emirates will have two versions of the aircraft the ULR (Ultra Long Range) with…489 seats [in three classes], and an Intermediate range version with two configurations - a three class version with 507 seats and a two class version with 625 seats.”

So how doest Emirates ensure service consistency on-board for planes carrying anywhere from 400 to 625 passengers? Nigel revealed that Emirates “cabin crew will be trained and licensed to operate all three versions of the aircraft.” To ensure that a consistently high standard of service is maintained, every new cabin crew will be provided with comprehensive training in Emirates’ state-of-the-art training college in Dubai. Moreover, on the ULR, Emirates will carry two cabin attendants to supervise the showers and ensure they are cleaned after each use! Now that’s some dedication.

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