US based Southwest Airlines and Canada’s WestJet Airlines paved the way for a strong relationship by announcing codeshares starting 2009. Not only will the relationship give customers access to a much larger number of destinations across North America and the Carribean, but the customers of both the airlines would appreciate the seamless brand experience across borders.

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Both Southwest and WestJet are the leading budget carriers in their respective markets and the alliance has the potential to enhance the brand value of both the airlines due to some key factors. Here are some of these factors.

1. Greater choice – Just like global alliances of full-service airlines allow passengers access to routes not flown by a specific airline, but a partner carrier, this partnership will give customers of budget airlines in North America the same conveniences for the first time. Furthermore, like Tiger Airways in Asia and Air Berlin in Europe, this alliance will allow passengers to take multi-leg budget flights too.
2. One size fits all – Both Southwest and WestJet fly only Boeing 737s, which will ensure a consistent experience for passengers in either airline. Moreover, sometime in the future, as both these airlines operate from each others’ hubs, maintainability would be much easier too.
   
3. No frills, no fees - WestJet is often known as the Southwest of Canada, duplicating its simple and consistent in-flight service practices. Both airlines offer no frills and have hardly any additional fees – and all this is transparent to the customer. Again, this leverages on the strenghts of both the brands and delivers a consistent customer experience.
4. Happy employees – Both airlines place strong emphasis on “servant leadership,” ensuring that employees remain happy. And as we’ve mentioned on this blog before, happy crew = happy passengers = great brand!
5. Aggressive fuel hedging – Both Southwest and WestJet have emplyed fuelf hedging as a key stragtegies to keep costs low and consistent in time of fluctuating oil prices. This will ensure that passengers travelling on both the airlines will not have to pay a higher fuel surcharge on one leg of their trip.

Brand Xtensibility – the ability for airlines to deliver a consistent customer experience across touch-points and over time – is key in building brand loyalty, and both Southwest and WestJet stand to gain substantially from this partnership. In fact, more budget airlines should get into this forray soon, if this experiement succeeds. Who would mind flying from Bangkok, Thailand to Darwin, Australia via Sinagapore on AirAsia and Tiger Airways?

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Despite a number of US based airlines going bust in the past few months, and all the talk of consolidation and more bankruptcies in Europe, the budget airlines in Asia seem to be doing rather well.

Tiger Airways, based out of Singapore, is expanding into Australia rapidly and there are talks of starting a Korean hub. Air Asia is doing better than ever on regional routes, and now starting long haul budget travel as well. Even though the growth of Indian budget carriers has slowed, they are still doing well, given the state of the industry in the rest of the world. The fact that ever more Asian airports are coming up with budget terminals is testimony to the fact that demand will increase in the near future. So what is it that other airlines can learn from the Asian budget carriers to be more successful?

1. Use newer planes. Average fleet age at AirAsia is 4.7 years, 2.5 years at Tiger Airways, 4.4 years at Air Deccan. This not only ensures that planes are more fuel efficient, but the customers feel better and safer in air too. The youngest fleet in the US for a major airline is 8 years, at Alaska Air, though Virgin and JetBlue are changing the game a little there. Already, there have been rave reviews of Virgin’s fleet.
2. Employ smart fuel cost-saving techniques. With fuel becoming a significant component of the cost, airlines should pro-actively think of ways to save costs in this regard. Techniques such as fuel hedging are very popular. Many airlines are now slowing down in the air, as well as making “gentle” landings to save fuel related costs.
3. Charge only for value added items. Customers can be very disgruntled when they are charged for items they weren’t expecting to pay for. Unfortunately, a number of budget airlines have become very good at extracting every single penny possible from the customer. Ryanair once charged $50 to allow the use of a wheelchair to an elderly person. On the other hand, customers don’t mind paying more for extra legroom in the exit row. Similarly, there can be services such as priority boarding, or even a budget business class in a plane which can be sold for an extra charge. A number of Asian budget carriers are doing this already.
4. Compete on experience and service. In most cases, good service at most customer touchpoints doesn’t cost a dime. Be it smiling check-in staff or compassionate stewards who care about the passengers like their own family. It is this that has got Southwest to where it is today. Airlines are leading the service industry, and should be setting exemplary standards too.
5. Be an LCC+ The days when airlines used to only be “cheap flying buses” are over. More and more budget airlines have a “mixed” model where they offer value added services and are deviating from a pure-budget model. AirAsia is starting long haul flights, and value added services are being offered on a number of airlines. Simply put, it’s a good way to make money.

Ponder that!

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Links:

1. Airlines moving from fixed costs to variable costs

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