SimpliFlying

In times of economic uncertainty, business travel decreases as organizations slash travel budgets. The International Air Transport Assn. is already reporting that business and first-class travel have experienced the biggest plunge in five years. Promising all-business class airlines like MaxJet, Eos and Silverjet have gone out of business in just a matter of months. Other airlines are cutting capacity too, as fuel costs rise. So what does this mean for the future of business travel? Is it going extinct, or is it here to stay? Let’s analyze this from two perspectives: business class-only airlines, and full service airlines with specific all-business routes.

All-business class airlines: Verdict – Going Extinct

The all-business model was always considered an experiment and at record high oil prices any new model struggles. Aviation analysts point to the premium-class graveyard where the tombstones are reminders of such short-lived U.S. airlines as Air One, Air Atlanta, McClain, Regent, MGM Grand and Legend. Most of these offered domestic US routes only, which re-affirms the point that there is little domestic market for all-business carriers.
Read the rest of this entry »

The airline industry is one in which there are a lot of externalities – situations beyond the control of individual airlines, which they have to deal with. These may include events such as 9/11, weather conditions, pilot union trouble or even the bankruptcy of a competitor. Though on the face of it, these may all seem to bring trouble, but if leveraged well, these externalities can lift the airline brand in a number of ways. This is because almost always, a number of airlines face a similar macro-situation simultaneously, but it is those who deal with it well who come out triumphant.

Here are three examples of how airlines around the world have been resilient in the face of externalities.

1. Olympics in Beijing? Let’s send the A380 there. To capitalize on the increased travel demand to Beijing during the Olympics, Singapore Airlines recently announced that they will be flying the A380 to Beijing during this period. What a perfect example of dexterity. Not only will SIA be able to showcase their premium product to a large number of travelers (who’re ever so happy to be on the A380), they’re charging more for those tickets too. Perfect win-win situation.
2. Competition died? Let’s service their routes. Alaska Air started new routes to Hawaii from Seattle after Aloha Airlines collapsed earlier this year. Not only were they able to service existing demand. Another win-win situation.
3. Passengers stranded by competition? Let’s help them out. SilverJet offered seats to stranded Eos passengers between London and New York once the latter ceased operations. Cathay Pacific offered seats to tons of students heading to London once Oasis Hong Kong went out of business. Both these airlines appeared as “rescuers” in the eyes of the passengers. What better way to acquire customer loyalty, that too from those who were going to the competition earlier.

Response to externalities is a crucial, but often overlooked, strategy that can be utilized by airlines to win the hearts and minds of their passengers. These three customer examples demonstrate that.

Please feel free to share your own experiences in the comments section, where you’ve encountered dexterity on airlines’ part.

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Links:

1. SIA to fly A380 to Beijing Olympics
2. Alaska Air to fly to Hawaii
3. SilverJet’s sweet deal for EOS passengers
4. Cathay Pacific operating flights for stranded Oasis passengers

Airlines are dropping from the skies like dead flies these days, especially in the US. And the bankruptcies have not been limited to just one category of airlines – everyone from budget carriers to luxury airlines seem to be going bust. The latest to fold up is Eos, the all-business class airline that operated between New York and London. Oasis HongKong folded in the long-haul budget airline category, and of course there were the multiple US airlines like Aloha, Skybus and ATA that have gone out of business within weeks of each other.

Ironically, a number of them seemed to have great brands! Aloha was rated as being the best airline in the US for service. Eos was right up there in the all-business airlines category and we wrote about them in a previous post. Oasis HongKong was a well known brand in the region as well. Reasons for failure are everywhere. But what are some lessons that can be learnt from the experiences of the airlines that were? Here are five of them. Read the rest of this entry »

Since the late 1990s, many airlines have discarded First Class for Business class, or a mix of the two (think Delta and Air New Zealand). Of late, full-business carriers have come and gone (like SilverJet and MaxJet respectively). Now legacy carriers like Singapore Airlines and British Airways are looking to introduce Business-only flights on their long haul routes (click here to see inside the cabins of these airlines). So, what is it that makes business class tick, and how can airlines differentiate their product, as the top tier gets crowded.

First the three functional requirements of a business traveller:

1. Reliability + Frequency - on time performance and lots of options for timings
2. Flexibility - business travelers often like to change their plans at the last minute
3. Comfort - if the business traveler is able to have his own private space and get a week’s worth of work done on his laptop in-flight, he’ll not be too concerned with money Read the rest of this entry »

   

   Tags: Business class, EOS, Silverjet, Singapore Airlines