Full service low cost airlines are here – what should traditional airlines do?
Yes, full-service low-cost carriers are a thing. I flew with one from Lisbon to Sao Paulo just the other day. Let’s just say that, even as a consultant, I didn’t quite expect the experience I received. It was, in fact, a much more pleasant experience than many recent flights I have had with the likes of Iberia or American Airlines.
The unsuspecting victim of my experiment/trip was Azul, a Brazilian low cost airline that started life as a JetBlue clone and has now expanded to long haul services. The flight, despite some clumsy boarding at the beginning, was flawless. There was free food, free in-flight entertainment (IFE) and free smiles. With the latter being a notably absent element from many of my recent flights with more “traditional” airlines.
When preparing to fly a low cost airline on long haul, I had braced for the worst, but I was pleasantly surprised, in part because the airline under promises and over delivers. This might be in part by design but also related to its LCC image as people don’t expect much from a low-cost airline and when they get on the plane and find free food, good seats and nobody trying to sell them anything.I was pleasantly surprised.
Why should “traditional” airlines care?
During the flight, I spent most of the time wondering how will the so-called “full service” airlines cope with this new kind of competition. After all, the expectation caused by them not being (officially) low cost airlines is already high, and – with a few exceptions – sets up passengers for great disappointments.
On the marketing side, traditional airlines are stuck with the images of quality and care that they have cultivated in times of monopoly. They perceive this image as a key differentiator or a core brand element and are unwilling to let it go, at least on the communication side. In the real world, however, they are charging for seat assignment, showing advertisements on planes, reducing comfort and doing everything they can to cut cost and boost ancillaries.
Halfway through the flight, I was already feeling sorry for them. After all, they are in equal part victims of the market and of their own legacy with its high costs structures that supported the old model. It then occurred to me that maybe they still had an advantage. I thought that maybe their hub and spoke models and alliances would allow them to compete with better route options and connectivity.
For a moment, thinking of some of the airlines we have worked with over the years, I felt better for them. Then I realized that I had arrived in Lisbon on a flight operated by a TAP subsidiary and that I was going to fly onwards from Sao Paulo in one of the thousands of flights that Azul operates across Brazil, and the argument fell.
If you can’t beat them, join them
As I thought of my itinerary, I also realized that some so-called legacy airlines are increasingly relying on third parties to operate their their flights. My ticket had been issued by TAP, the plane that got me from Valencia to Lisbon had a TAP logo on it but it wasn’t operated by TAP, nor was, of course, the Azul plane that got me to Brazil and the domestic flight that brought me to my final destination.
My final surprise came on my flight from Sao Paulo to Florianopolis. It was again on Azul, but this time on a domestic route. Here I thought, they will at least try to act like a low cost airline. I was wrong. They did offer some premium seat options but I was able to select my own normal seat for free, and each seat came with a small IFE screen. During the flight, they offered us drinks and a nice selection of snack. Some passengers chose to take all of them. Once again, nobody tried to sell me anything for the duration of the flight.
What will the future hold?
Having seen this, I am left to wonder where this will go. For now, it is too early to say. Maybe the low cost airlines won’t be able to sustain the low prices on the long-haul routes, or maybe more airlines like TAP will come along and increasingly partner with lower cost providers for their flights.
However, one thing is clear: traditional airlines will need to either wake up or become a mechanical version of the Dodo bird. From a consulting perspective is also clear that this is not only a pricing issue.
While ticket prices are important and passengers do choose heavily based on price, they also “blacklist” airlines that they don’t want to fly with. These are generally airlines that have either disappointed them or whose brands and reputation don’t inspire confidence.
Just a few months ago, speaking with a senior industry person, I asked him, “Which airline do you fly?” He answered “A.B.U. When I asked him to explain he translated it for me “All But United.”
In the near future, many airlines will need to make a tough decision and figure out if they will adjust their brand image or their service levels. After all, even industry incumbents can’t have everything.