If you’re already up and running on Twitter, Facebook or other social media tools, a great way to augment your social media efforts is by tapping on one of the hottest trends around, location based services (“LBS”). Location based social networking is something VERY well suited for airlines. Just like “Tweets” was the buzzword of 2009, by the end of 2010, I expect “Mayor” to be the buzzword. And, these services are made to work well in the travel industry.

Popular Location Based Services

If you’re unfamiliar with LBS, here are a few that are popular, including a couple of travel specific ones:

Foursquare - Foursquare is a location based game/application, where users “check-in” at places around the city.  They get points for check-ins, adding new locations, and extra points for multiple check-ins in one day.  Check-ins can be automatically shared on Twitter and Facebook.  They can also become “Mayor” of a location if they have been there the most out of all Foursquare users.  Friends have access to see where you are, and where you’ve been, which can facilitate social gatherings that might have not otherwise happened.

Some companies are starting to use this application to target users by location.  For example, something like this may pop up on your screen: “Since you’re right around the corner from CVS, stop by and get 10% off”.  It’s  a great way for companies to get a relevant message out.  In general, it’s also a great way to increase awareness… the  more people check-in to the location, the more other people see it. Other similar sites include GoWalla and MyTown.

TripIt - TripIt gives users a way to track their travel itineraries  — including hotels, airlines, and more — and share them with their friends.  The application allows you to check-in online, and share detail on social networking sites, such as LinkedIn.  Users also see a history of their activity and statistics about their travel.  You can also add a trip that you are planning, but you haven’t booked yet.

Dopplr - Dopplr is similar to TripIt, in that it allows you to share your travel plans with other people. You can also find travel tips and advice from other travelers.

Leverage LBS as an Airline or Airport

Encourage Check-Ins

One way for airlines and airports to be “active” with services such as Foursquare, is to encourage travelers to check-in at their airline, airport, or even gate.  The benefit of this is that travelers can connect with each other, and you stay more top of mind, and get a free awareness boost, when they post their check-ins using social networking sites.  Or, if a flight is delayed, it will go much faster, if they find a friend to meet up with at the airport.

You could also tie this in with your frequent flyer program. If they check-in and publicize on Twitter or Facebook, they get 5,000 additional frequent flyer miles.

Reward Travelers

You could also run promotions to encourage check ins, with a giveaway for those who have checked in or for the first to check in.  Mayors are also a great source of loyal customers.  Why not make these people feel special by upgrading them to first class, giving them priority boarding, or announcing their name on the flight? For example, “We are proud to have with us today, the mayor of American Airlines.  That means he has checking-in using Foursquare more than any other traveler.  He was upgraded to first class for being such a special customer.”

Unmet Need

When travelers add trips to TripIt and Dopplr without flight information, what a great way to target them at their point of need, and offer them a flight that may fit what they are looking for.  In addition, if they have a flight booked, but no hotel or rental car, you can suggest your travel partners to them.  You can form a partnership with TripIt or Doppler, to be able to communicate with customers, so you can say something like “We see you are planning a trip from Paris to Istanbul.  We have many flights between those two cities.  Click here to search for a flight.”

Leverage  Frequent Flyer Program

A month ago, Tasti D-Lite began a program that tied their frequent buyer car in with social networking.  Whenever points are earned or redeemed, their system automatically sends out an update to social networking sites, including Twitter and Foursquare.  Why not add this to your frequent flyer program, including their frequent flyer balance?  Imagine, if every time someone uses his SAS Eurobonus card, a tweet or a Facebook status update goes out to his friends that “I just earned 5,000 miles flying from Oslo to Bangkok” or “I just got free petrol for 3,000 miles through EuroBonus”. This action will drive awareness, keep you top of mind, and get people talking.

Advertising

Some of these LBS applications, also allow advertising. It could be a very targeted ad, on TripIt or Dopplr.

What do you think?  Can  you see yourself implementing any of these ideas?  Do you have any other ideas? Let’s hear it in comments and over on Twitter (@simpliflying)

• Randy Petersen of Flyertalk on social media and frequent flyers – Part 2 of 2
• 5 Ways to Incorporate Social Media Into the Flying Experience, and leverage on your “followers”
• Does the latest social media application by Lufthansa have wings? 10 things I would do to ensure MySkyStatus flies
• How an intelligent seating system can bring ancillary revenues, and is great for the airline brand
• SimpliFlying, in the news…and more!

Note: This is a cross-post from Steven Frischling’s Flying with Fish blog. Steven Frischling, aka: Fish, is a self employed photographer, and founder of The Travel Strategist, who has flown approximately 1,000,000 miles since he began to track his mileage 2005.
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Throughout the past year airlines have suffered massive financial losses due to record high fuel prices, a weakening global economy and declining demand for airline seats.

In an attempt to increase their financial stability many airlines in the United States, and around the world, turned to the ancillary revenue generated by charging passengers for their baggage.   As angered as passenger have been regarding the checked baggage fees they have helped major airlines in the United States collect more than US$1,145,385,850 in revenue during 2008…and baggage fees weren’t even initiated by most airlines in the United States until the middle of the second fiscal quarter of 2008.

The fourth fiscal quarter of 2008 saw airlines pull in US$498,600,000 alone!

Checked baggage fees have always provided a significant revenue source for airlines, however prior to the past year this revenue was for excess baggage and overweight baggage. Airlines that do not allow any free-checked baggage, such as American Airlines, now consider all baggage on domestic flights to be ‘excess baggage.’

Airlines that allow passengers to check baggage at no fee, such as Southwest Airline and its policy to allow up to two pieces of baggage at no charge, still generate financial benefits of excess baggage fees. Southwest Airlines raked in US$25,226,000 in baggage fees during 2008, or approximately US$69,112.32 per day.

American Airlines, the first ‘Legacy’ airline to begin charging for all checked baggage brought in US$ 277,991,000 in baggage fees in 2008.  To break this down, American Airlines’ baggage fees bring in approximately US$761,619.17 daily from passengers checking bags.

Two months ago I addressed baggage fees here, 28/03/2009 – Checked Baggage Fees : Will They Go Away? Can You Avoid Them? , and stated I that I thought baggage fees were here to stay.  Looking at the overall baggage free revenue break down I am now absolutely sure these fees are here to stay.

Wonder how much your airline earned in 2008 collecting baggage fees?   Check out the info below from the US Bureau of Transportation Statistics.

American Airlines (AA): US $ 277,991,000
US Airways (US) : US$ 187,081,940
Delta Air Lines (DL)** : US$177,063,000
United Air Lines (UA) : US$132,994,000
Northwest Airlines (NW)** : US$121,599,000
Continental Air Lines (CO) : US$99,315,000
JetBlue Airways (B6) : US$35,307,650
AirTran Airways (FL) : US$29,400,960
Southwest Airlines (WN) : US$25,226,000
Alaska Airlines (AS) : US$24,773,000
Frontier Airlines (F9) : US$15,155,820
Hawaiian Airlines (HA) : US$11,627,180
Midwest Airline (YX) : US$3,977,840
Virgin America (VA) : US$ 2,568,560
Sun Country Airlines (SY) : US$1,304,900

**Delta Airlines & Northwest Airlines are now one airline, operating as Delta Air Lines, under the airline designator “DL”

With airlines earning roughly US$3,138,043.42 daily from baggage fees, do you think we’ll see them go away any time soon?

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American Airlines has recently launched a new flash-animated website where visitors can sample their new Business Class and First Class seats and amenities. It’s tastefully done, and similar to the effort by Cathay Pacific last year.

What’s more impressive is how American Airlines has created a highly personalized email brand campaign to get people to this website. Basically, anyone can increase their chances of winning the lucky draw by recommending the website to four friends. You may think that’s like spamming, but the thinking ends there.

What comes to the inbox is a beautifully crafted email that is highly personalized for the recipient. You’d almost want to jump ahead and click the link. The email is concise, humorous and actionable. Of the three key points they mention, only one is a “sell”, and the others are bound to make you laugh, like “You wish you’d rather win that amazing prize instead of Thomas”.

I’ve taken a screenshot of the email here and distilled the key lessons anyone can learn about email marketing. And with all the spam that we get in our inbox these days, such an email is a breath of fresh air. Well done, AA.

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Continuing with the ancillary revenues special this March, I’d like to explore the issue whether ancillary revenues are good for the airline brand, or detrimental. We all know they’re good for the balance sheet, but what about the brand? To answer this question, let me segment ancillary revenues in two bands – charging for value addition, and un-bundling current product and services.

Charging the passenger for value-addition

A comment on the hotly debated article I wrote on RyanAir’s competition for charging passengers got me thinking. Here’s what Shyrose had to say:

“RyanAir should link up with the local taxi companies of the detination airports and agree a deal with them, whereby flyers can book their taxi on the plane so it’s ready and waiting for them the other side. Taxi companies give Ryannair a referral fee, and Ryanair will be positioned as offering greater value service for customers.”

And I think Shyrose is bang-on-target. Customers don’t mind paying for additional services they value. And this is especially true when the offer is in-sync with the brand expectation. There are ample examples of such value addition. Travel insurance and car rental are popular ones. The intelligent seating system I talked about in an earlier article is another. Singapore Airlines has “boarding pass privelages” for its flyers, where they get discounts at restaurants in major cities by presenting their boarding pass. And the airline probably gets a commission from the restaurant for this.

Such tactics are great for the legacy airline, since they’re anyway charging a higher fare for value-added service on-board, and the target customer would be the right one for such an offering.

Un-bundling the product and service

People mention RyanAir and easyJet as champions when it comes to earning ancillary revenues by charging the customer for everything other than the seat – 16% of easyJet’s revenues are from ancillary sources. But another airline that has done a good job with un-bundling the product is Air Canada. You can choose the fare based on your preference of the level of in-flight amenities.

Where this approach gets ugly is when airlines start charging for everything from a cup of water (US Airways) to even the loo (RyanAir?)! And this is where the whole resonance with the brand becomes important.

How far can the brand be stretched?

Everyone knows that RyanAir is a low-cost airline and you’re only paying for the seat. You can look at a simple chart of all additional fees on their website. RyanAir is very, very transparent about what you have to pay for, and what’s included in the fare. And this transparency only strenghtens the brand promise further – that of the cheapest seat.

Unfortunately, this is a something even legacy airlines are doing, but without the transparency. For example, information on additional charges is spread all over the American Airlines website, and you’re bound to learn of an additional charge at the counter. This creates a lot of confusion in the travelers mind and erodes brand loyalty.

Here’s a simple model I feel airlines should follow: legacy carriers should largely go for providing value-added services and then charging for them, and budget carriers should mostly un-bundle their offerings so that passengers can get some additional comforts, other than the seat. Of course, they should learn from each other. But at the same time, should avoid doing something absolutely detrimental to the brand. Need an example? Singapore Airlines charging $100 for a round-trip flight for choosing an emergency-exit row seat! I know for a fact that this move has annoyed even the most loyal customers!

What do you think? How can airlines earn ancillary revenues without resulting in a conflict with the brand? Does the solution I proposed make sense? Any examples of airlines doing this well?

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I’ve had the opportunity in the past few months of interviewing a number of distinguished thought leaders in the aviation and branding industry over the past few months on SimpliFlying. But a recent encounter in New York has left a deep impression on me, since this brand leader’s ideas truly resonated with what I’ve been writing about technology branding for airlines lately.

I’m referring to my conversation with Joe Crump, the VP of Strategy & Planning at Razorfish – the leading digital branding agency. At one point in the interview, he predicts that “any airline that doesn’t go digital pretty damn quick is going to find itself obsolete”. And he has 25 years of experience in branding and technology to back up his foresight.

Airline branding – “genuinely complicated”

In his interview, Joe shared that the fundamental problem of the airline industry is that “of over-promising and then inconsistently delivering”. And this is mainly because of the number of externalities airlines need to deal with – from fluctuating oil prices to severe weather conditions – all of which often impact the business negatively. Ultimately, it’s detrimental to the brand and makes airline branding “full of rich challenges”.

Expanding the brand “beyond the browser”

Joe also discloses that the “least important part of brand building is how you talk about it”. It’s the brand experience that matters most, and in case of airlines, begins much before a passenger steps on the plane. These days, it starts on the Internet. Joe believes that airlines cannot afford to have stale websites anymore, as they’re competing against the likes of Apple and Coke, when it comes to delivering an online brand experience.

He shares that airlines like Virgin America, JetBlue, Southwest and Ryanair are setting new benchmarks in web interaction. Personally, I’ve had great experiences with Cathay Pacific as well. But most of these airlines are pretty agile and generally young, without legacy baggage.

Joe’s advise for legacy carriers is that they need to renew their culture by imbibing a spirit of innovation across the airline. An example of this he gives is that of American Airlines adopting Go-Go for providing wifi in the air.

Without revealing much more about the man and his ideas, let me jump straight to the interview. Below, you’ll find the first of three parts of Joe’s interview. The other two parts of his interview will be posted on SimpliFlying on 21st and 23rd January.

What are your thoughts on Joe’s analysis? Do you agree with him, and my earlier assessment that airlines need to go digital with their brands? What’re some examples of airlines succeeding at such efforts, and failing too?

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Canadian playwright Raymond Hull is famously quoted as saying that “he who trims himself to suit everyone will soon whittle himself away.” Laura Reis has aptly applied this concept to airline branding, and concluded that airlines need to “do one thing and do it well” to build lasting brands.

Laura Ries is a world renowned branding guru and is the president of Ries & Ries, an Atlanta-based marketing strategy firm that she runs with her father Al Ries – the person who coined the term “positioning”. Together they have consulted with many Fortune 500 companies, including leading airlines. Hence, it is an honor to feature her exclusive interview on airline branding at SimpliFlying.

The power of focus

In this Part 1 of 2 interviews, Laura and I discuss the importance of laser-sharp focus for airlines. She shares the example of American Airlines – whose latest campaign is “we know why you fly”. “Who doesn’t know why a person flies!”, Laura exclaims. American Airlines is a textbook example of unfocused and diluted branding, where a company is trying hard to please everyone, and in the end achieving little.

On the contrary, airlines like Southwest and AirAsia know very well the segment they serve and cater their product and brands specifically to this group – budget travelers. At the other end of the spectrum are airlines like Singapore Airlines and Virgin Atlantic, which have a strong focus on high-end travelers. All of these are extremely successful.

The value of simplicity

Something else Laura points out is that very often the “complicated price structure infuriates the passenger”. They might see a $29 airfare, but adding taxes makes the figure balloon up to over $150. In addition to that, they might still end up paying baggage fee and for other peripheries at the airport.  Laura believes that unless the passengers understand the cost logically, and are told about it upfront, their trust in a brand decreases over time. Hence, it’s in the airlines’ favor to keep things simple, especially ticket price structures.

I shall not dive into more details, and let you listen to the first part of SimpliFlying’s exclusive interview with Laura Reis. Part 2 will be out on Friday, 12 Dec (where she talks about deriving brand value from mergers and why no one will join social networks by airlines).

What do you think? Is focus a good thing or bad? Will airlines lose out if they focus too much on a niche? Will having simplistic pricing structures result in a loss of profits? What can really enhance the airline brand? Let’s hear it in the comments section.

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• Boston to New York for $7? Can someone explain why?

….

There’s been ton of chatter that Qantas is looking for a bedmate even since the new CEO Alan Joyce took over. Finally, British Airways CEO announced that the airline is in talks with Qantas regarding a potential merger. On the surface, it may look like a good deal, since there are so many synergies to tap on the famed Kangaroo route. But dig a little deeper and you will realize that Qantas may just become a concubine for BA, rather than a trusted mate, and it might just make sense to keep the options open towards airlines like Cathay Pacific.

But before I get into that, let me share my thoughts on why a Qantas and British Airways is still good for both the airlines.

Why QF and BA make a good couple

The goal of mergers is to generally extract value by streamlining operations. But Qantas and British Airways (BA) can probably hope for much more than that, if the merger goes ahead. Both airlines are not only part of the OneWorld Alliance, but also already operate like a single airline on the Kangaroo route between London and Sydney. Their frequent flier programs are in sync and both have similar corporate structures.

The marriage may work with the blessings of the Australian government, which currently has a cap on foreign ownership of Qantas. Importantly for BA, it can tap on Qantas’ low-cost carrier, JetStar, to expand its reach in Asia Pacific as well as leisure destinations in Australia.

There are a number of downsides for this tie-up too, but they have been discussed elsewhere. So, I shall focus on other alternatives Qantas should explore, specifically, Cathay Pacific.

Cathay Pacific may make a better bed mate for Qantas

Reason 1: Complementary routes in growing markets. Just like BA, Cathay Pacific is also an integral part of the OneWorld alliance. But unlike BA, Cathay Pacific has  much better presence in China, one of the world’s fastest growing aviation markets. Also, tying up with Cathay Pacific will give Qantas a much better access to lucrative Asia Pacific – US routes as well – again a growing market. This, as opposed to British Airways’ better access to Africa and Europe, which are mature markets, but the growth rate is much lower than Asia. Also, Qantas’ interest in Africa is bound to be much lower than in China.

Simply put, a merger with Cathay Pacific will allow them to rule Asia-Pacific together. Just look at their existing route maps and you’ll understand what I mean.

Qantas Route map

Cathay Pacific Route map

Reason 2: More focused attention, resulting greater chances of success. BA is already trying to tie up with Iberia and American Airlines. Moreover, there will always be tough competition with AirFrance-KLM and Lufthansa (+Swiss, BMI, Austrian…) to keep BA’s hands full. Hence, Qantas may just become a concubine, rather than a bed-mate.

In Cathay Pacific’s case, it only has the subsidiary DragonAir, just like Qantas’ JetStar. Hence, there are much lesser distractions, which will allow both the airlines to focus on leveraging their merger. This focus may very well result in a successful, long-lasting marriage.

I hope Singapore Airlines and Emirates are watching these developments closely and coming up with their own strategies!

What do you think? Is BA good for Qantas or Cathay Pacific? Or someone else like AirFrance-KLM or even LAN Airlines? I’d love to hear your thoughts in the comments.

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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.

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.

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Image via CrunchBase, source unknown

A recent article on The Sietch Blog claims that Virgin Atlantic is “on the brink of collapse”. The argument is based on Sir Richard Branson’s recent statements in the press about the threat posed by the BA/AA collusion. On this, an un-named source has commented that it reflects that Virgin Atlantic is in trouble.

Whether Virgin Atlantic, and their sister companies Virgin America and Virgin Blue can ride out the storm depends on many factors, but at the moment things are not looking good for the former wunderkind of British industry. The “budget house of cards” won’t stop toppling for some time yet.

Prevention is better than cure

In fact, Branson’s comments show Virgin’s preparedness for the upcoming threat and they are dealing with it head-on. Forbes Magazine revealed in an article that Branson unveiled last Friday the slogan “No Way, BA/AA,” which will be painted on the side of Virgin’s aircraft. This campaign will alert consumers to the “anti-competitive” nature of the proposed tie-up, which Virgin hopes will then indirectly put pressure on American antitrust regulators.

Virgin is a trusted brand

Virgin Atlantic is one of the few airlines in the world with a sound business model (first class service at business class prices) and an outstanding brand image. Most importantly, Branson is an icon people can relate with. Customers trust the Virgin brand, and this brings loyalty. They will not ditch a loved brand easily and Virgin is likely to further strengthen its position an industry leader once this crisis is over.

Let’s think of a simple scenario. If given a choice, would a business traveler fly across the Atlantic on an old American Airlines plane with service quality not even close to that of Virgin? Or would he rather fly Virgin Atlantic, having their great in-flight product and service coupled with a luxurious lounge (shown below)?  The difference in the brand experience is so huge that customers would think twice before switching loyalties.

Virgin Atlantic's lounge in London Heathrow

Hence, it is a stretch of imagination to say that Virgin Atlantic is “on the brink of collapse”. What do you think? Can a strong brand support a business in bad times? Is Virgin Atlantic indeed in trouble? Or are we thinking too much? Let’s discuss…

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On 11th August, the pilots of Delta and Northwest agreed to the proposed merger between the two airlines, smoothing out the way for a new world’s largest airline to emerge. What does this mean for American and international commercial aviation world? A peek into history may give us some insights.

The glory of Pan-Am

The decline and demise of Pan-American World Airways in 1991 marked the end of an era in United States. Pan-Am was, for many decades, the de-facto flag carrier of the United States with an extensive international work. It was arguably the creation of American politics in the pre-deregulated industry before the early 1980s, as the airline flew international routes while other airlines were largely restricted to domestic routes.

For over three decades after the Second World War, Pan-Am held the stature as the leading international airline in terms of innovative products, as well as opulence in luxury travel, ushering in the jet age by launching the Boeing 707 in 1959, the iconic Boeing 747 in 1969 and record-breaking non-stops between New York and Tokyo, and Los Angeles and Sydney with the Boeing 747SP in 1976. Pan-Am also pioneered business travel with the launch of its clipper class, a market that was to become today’s lucrative business class. Pan-Am was a brand that Americans flew with pride – hardly a case with US based airlines today.

After more than two decades of deregulation, US legacy carriers are entrenched in their respective markets. Continental, US Airways and Delta have built a strong European network. American and Delta are strong players in Latin America while Northwest and United share the huge Asia-Pacific market. A merger between Northwest and Delta could see the emergence of a US international airline with a global network unseen since the days of Pan American at its height.

Can Northwelta re-capture Pan-Am’s brand excellence?

US airlines have ventured deep into the low-cost, low-price business model to stay afloat in the brutal competition in the deregulated US market. Such a model has inevitably crept into the international travel market, where winners of international accolades and awards such as those announced by Skytrax and the eminent Travel and Leisure magazine are usually barren of American airlines. Both the rankings did not feature a US airline in the top 10 this year.

On the bright side, the fact that Delta recently launched its New York-Mumbai flight with its brand new 777-200LR equipped with a new herringbone-styled Business Class is an encouraging sign indeed. Improving in-flight service and amenities would be a first step to build a strong brand affinity.

Learning from those who did it well, across the Atlantic

Successful mergers between KLM and Air France, Lufthansa and Swiss International may give indication of the possible benefits to be reaped by the Northwest-Delta merger. Lufthansa and Swiss, for example, cross sell their seats on their websites to provide customers with more travel options to choose from. Commonality in fleet management also provides an avenue to achieve cost efficiency. Air France and KLM have a highly similar international fleet of Boeing 747-400, 777; Airbus A330 and A340.

On the other hand, US airline leader American Airlines remains deep in the red with a US$1.4 billion loss in the second quarter of 2008 , which further emphasise the tough challenges ahead for the new industry leader.

Time to ponder…

What do you think? Can Delta-Northwest can emerge as a stronger airline and re-establish the position of American commercial aviation on the international stage?

Will we ever get back the glory days of Pan-Am for US aviation? Or will we forever have to pay for a packet of peanuts and to check-in our bags?

This is a special commentary written by guest contributor Hansen Yeong. Hansen’s father had worked for Singapore Airlines for more than 35 years and Hansen believes that he was born an aviation geek. He is an enthusiast in all forms of commercial aviation – from aircraft technicalities to airline management and marketing. Hansen is an Economics lecturer in Singapore and he enjoys writing. He is currently a contributor to SimpliFlying.com and working on his first novel.

If you enjoyed this article, feel free to share it with your friends. You can also sign up for free updates by email or RSS. To learn more about airline branding, please download the free white paper, or join the airline branding Facebook group today.

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