How do you think Air Asia permeates a market and wins it? Some interesting anecdotes?

When it comes to new market launches, AirAsia is one of the most innovative, not just in the region, but in the world. And I can say that confidently, having worked with a lot of airlines around the world. They don’t just have advertisements, but connect with the customers at a deeper level, having conversations about topics relevant to them, and yet creating a splash.

Take the recent Mumbai flights launch, for example. Not only was there pomp and show during the first flight, and even Bollywood was invited, at the same time, over the last couple of months, AirAsia built up a lot of interest about Mumbai and India through candid articles on its very popular blog, Planely Spoken, like “Mumbai in 3 days and 2 nights“. On the day of the launch, there was even a special Twitter hashtag #AAroxMumbai where followers could participate in the happenings.

Moreover, when AirAsia enters a market, it tries to dominate it, first by entering multiple cities, then by adding frequencies to those cities such that it is the dominant player. Trichy, AirAsia’s first Indian destination has three flights a day to Malaysia. The airline will have almost 150 weekly flights to India before the end of the year, which will make it the 2nd most dominant airline in India, after Emirates.

It is this out-of-the-box marketing strategy, coupled with complete route dominance that makes AirAsia a formidable player in any market.

They have openly admitted loss in Middle East market entrance. Do you think all other next door markets are pretty exhausted by them so India will be key to there future?

Personally, I don’t think they’ve “admitted loss”. What they’ve done is retracted out of the market – for now. That because just a single route to Abu Dhabi couldn’t be sustained on its own, without dominating other nearby destinations. They will probably re-enter when their new A330s arrive. So, it’s not really exhaustion, but the opportunity that’s leading them to India. They’ve already conquered Southeast Asia, China and even the Australian cities they’re in.

India is the next logical choice, with AirAsia’s destinations like Bangkok, Singapore, Bali and Kuala Lumpur already popular among Indian tourists. The Indian tourist is price sensitive, and time insensitive. This means they will hunt down the cheapest bargains, even if the journey takes a little longer. This fits in very well with AirAsia’s model.

How can the Indian government promise a level playing field?

I think AirAsia entering India is a double-edged sword. While its entry is a boon for the Indian traveler and tourism in India, it might spell doom for some of the Indian airlines. Already, Air India and Jet Airways have had to slash prices to destinations AirAsia flies to. The onus now lies not on the Indian government, but the individual airlines themselves, to innovate and come out on top.

Two airlines I have confidence on are SpiceJet and Indigo. Especially the latter, given its grandiose growth plans for the next couple of years. Both airlines can soon fly internationally, and though SpiceJet is muted about its destinations, Indigo has expressed clear desire to head down to Southeast Asia – where Air Asia and Tiger Airways loom. On the west, it’s the threat of Air Arabia and FlyDubai.

A smart move by the Indian budget carriers would be to forge some sort of an alliance with AirAsia. Though code shares to India are a remote possibility, assuming the purist LCC models, a much more likely scenario would be to synchronize timings of their flights, or have a marketing tie-up for destinations beyond those the Indian carriers will fly to. For example, a passenger might fly Indigo from Delhi to Singapore (a route AirAsia is not authorize to fly), and AirAsia from Singapore to Bali. This becomes a win-win situation then.

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Not very long ago, everyone was swooning over the re-birth of the romance of travel and airlines in India leading the pack. Business week had good words to say about Jet Airways, and even here on SimpliFlying, I did interviews with senior Jet executives.

Unfortunately, after two years of heavy losses, the brand was already tattering. A few months back, there was the employee sacking saga, and now, the mass sick-leave by the pilots is ruining the brand image built by the founder with great care over time. Sad but true.

And nowhere was this paradox more evident than on the front page of a leading Indian daily’s website. See it for yourself.

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SimpliFlying: India has a lot of first-time fliers. What’s different about marketing to first-time fliers vs frequent fliers?

Binit: First time fliers may be quite apprehensive, and they require reassurance that the experience will be a pleasant one. Apart from the actual act of flying, in a market such as India flying for the first time can involve crossing social barriers which can in itself be quite daunting. Low cost carriers have made flying affordable for some who might otherwise never have dreamt that they could fly, something which was once a preserve of the elite.

However, apart from Air Deccan, which pitched itself as the common man’s airline (see video below), it is not obvious that any of the other carriers have made an effort to specifically appeal to first time fliers, but end up getting them anyway. Air Deccan’s ethos was built around first time fliers and their marketing included a wonderful television advert that captured the mixture of nerves and excitement that a first time flier feels and portrayed itself as the airline that understood and would take care of such passengers.

SimpliFlying: India is well known for disorganized retail and non-traditional channels. Which are the key channels through which Indian airlines build its brand awareness among the target markets?

Binit: Indian carriers have generally pursued quite traditional channels for brand building, namely print media advertising and outdoor billboards. Television has not been a major medium due to cost. Kingfisher has probably adopted the most diverse approach – the airline has been associated with sponsorship of the Indian Premier League and Formula 1, whilst it also benefits from the fact that Kingfisher is a brand beyond the airline and it benefits from the spin off of initiatives such as the Kingfisher Calendar and promotion of its water and beer. Air Deccan when it first launched made efforts to promote its presence in the smaller towns and villages by sending branded vans into rural India, which also doubled as booking locations.

SimpliFlying: Do you think a strong brand can soften the impact of downturns on airlines?

Binit: In an economic downturn, where people are reducing consumption it’s questionable whether strong brands will prevent travellers from flying less per se. However, individual airlines with strong brands may benefit in two ways 1) they may be in a position to maintain stronger yields because of the value of their brand and 2) in times of uncertainty, passengers may prefer to travel with a brand in which they have greater confidence and trust – therefore a strong brand allows them to increase their market share even though overall industry traffic may be declining.

SimpliFlying: Which Indian carriers will be the first to emerge out of the crises. What puts these in such a strong position?

Binit: At present all Indian carriers are losing money and have weak balance sheets. However, amongst the 3 full service carriers, Jet Airways and Kingfisher, have excellent product, strong brands and loyal followings. Air India on the other hand is facing severe problems with its integration with Indian, and political interference and lack of direction mean that the national carrier is likely to continue to struggle. Amongst the low cost carriers, as most are privately held it is difficult to know the exact state of their health. However, Indigo and SpiceJet have established themselves as consistent and reliable operators.

SimpliFlying: What role does the travel agent play in the Indian Industry?
Binit: In the full service space, travel agents control about 90% of sales. In the case of low cost carriers this figure is probably closer to 70-75%. In fact it is understood to have dropped lower, however aggressive promotion by Online Travel Agents saw the travel agent community reclaim some its market share.

SimpliFlying: How big a constraint is infrastructure in Indian carriers’ growth?

Binit: Airport infrastructure has certainly been a constraint in the last few years – many airports are operating at well beyond their design capacity resulting in delays, congestion and a poor passenger experience. The delays mean that airlines are unable to operate efficiently which increases costs. However, a major upgrade and modernization program is underway and improvements are being seen. It will still be a couple of years before all of India’s major metros have world class airports, but we are on the way.

SimpliFlying: What role will foreign carriers have to play in the Indian market, given the regulations?

Binit: At present foreign airlines are barred from holding any equity in an Indian carrier – although foreign non-airline entities may take a shareholding of up to 49%. In light of the poor financial health of Indian carriers, there is a desperate need to raise capital. The most likely investors in the current environment are those that have a strategic interest, namely airlines. As a result, the government appears to be set to relax the restrictions to allow foreign carriers to hold up to 25% in Indian carriers. There are likely to be a number of interested parties if this was to happen, which apart from capital would bring in much needed expertise into the sector.

SimpliFlying: Do you see more consolidation in the Indian aviation industry?

Binit: There are too many airlines in India at present and with their current financial state, consolidation is inevitable and desirable, either through merger or through market exit.

SimpliFlying: What do you see as the biggest threat and the biggest opportunity in the Indian market?

Binit: The biggest threat is that airlines do not take the necessary steps  to reduce capacity. If they fail to do so, the likelihood is that there will remain an urge to discount heavily to fill seats, the result of which will be to diminish overall yields and revenue. The biggest opportunity is the fact that we are only at the beginning of the growth curve. Even today, after domestic traffic has tripled in the last 5 years, it is estimated that only 2% of Indians travel by air in any given year. The growth potential is enormous.

SimpliFlying: Your predictions for aviation in India in 2009?

Binit: 2009 is going to be another tough year for Indian carriers with demand expected to remain soft for the first half and picking up from around Q3. However, fuel prices are low, airports are improving and if airlines can remain disciplined about capacity they can at least stem losses, even if they can’t return to profitability. The key is to stabilising the situation, raising cash cover to cover requirements and being ready to take advantage of an expected upturn from 2010 onwards.

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• Three reasons airlines in India will come out strongest from the recession

…

Jet Airways recently hinted that the worst is over for them and they expect to break even again in the middle of this year. And this is mostly because of the drop in fuel prices (obviously!) as well as the prudence shown by the management in cutting unprofitable routes, including that the San Francisco. And I don’t see this as an isolated case.

After my recent interactions with key airline executives in India, including the CEO at SpiceJet, it is my belief that airlines in India will not only be one of the first few to emerge from the recession, but also come out the strongest. Here are three key reasons for this conviction.

1. Airlines that stand by their customers in bad times win hearts – brand matters

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Just look at what’s happening in the western airlines in this recession. US Airways recently started charging for blankets, and they already charge for water (which can even be a health hazard!). Ryanair is famous for being the most hated airline in Europe, since it hardly takes care of its customers. Interestingly, bad times have not resulted in a disregard for customer service in Indian aviation.

Recently when I flew from Bangalore to Jaipur on Indigo Airlines, I was greeted by my name before being served soem beverages. Now, that’s a first. I’ve never been greeted by my name in an Economy Class on any airline before, let alone on a low-cost carrier! Jet Airways recently won the Best First Class award, and Kingfisher does everything it can to uphold its 5-Star Airline status.

Did someone forget to tell these airlines that “we’re in a recession”? Probably not. But their focus on keeping the customer happy will pay off in the long run. Those who’re still flying will never ditch them. And when good times return, these same happy customers will generate enough brand awareness through word-of-mouth to bring in new passengers.

2. Being nimble and resilient pays off

Unlike other airlines that’re expected to do well in the recession, especially Middle Eastern ones, most airlines in India do not have any special privileges like reduced oil prices or backing from a government with deep pockets. This has forced them to act on their own to cut costs to remain aflot in these difficult times. And they’ve done so smartly too. Instead of bothering the customer with frivolous charges like in US airlines, Indian carrier have cut costs where it matters.

Kingfisher Airlines has swiftly postponed plans for more overseas route launches (Singapore, Hong Kong) – since they tend to be resource heavy at the beginning. Jet Airways too has not shyed away from cutting glamorous but bleeding routes like that to San Francisco. Moreover, they’ve both either delayed the delivery of new aircraft, or leased them to airlines like Turkish and GulfAir. Most airlines in India have switched to focused marketing efforts, rather than blanket campaigns to get more bang for the buck. And Kingfisher and Jet Airways have set aside their competitive aspirations to forge a code-share alliance to save costs – as Lisa Markovic explained in a recent interview with SimpliFlying. It is this resilience and fast action that will pay off well in the end.

3. It’s the economy, stupid!

In the last 50 days, I’ve spent a considerable amount of time in New York, Singapore and Delhi/Bangalore. And the word “recesssion” has disappeared from the local vocabulary in that order too. India’s GDP will grow 7.1% this year, according to data released today. In what way is this a recession? At best it’s a slowdown from previous years’ growth of close to 10%, but c’mon guys…this is not a recession. And if anyone has any doubts, just head over to Marthelli in Bangalore or Gurgaon, just outside of Delhi, to dispell all the myths. And this economic growth translates to the aviation industry too.

Talking about the Indian operations, Kenji Sugino, Director – Sales, Administration and Marketing, ANA recently said “Despite the global slowdown, India is one of the growing markets for ANA. We are positive about this year and are expecting good load factors and sales margins. We are going to play strategically in the Indian market this year.”

More than anyone else, it’s the Indian carriers that will reap the best rewards of a still-active Indian economy, if they play their cards right. And till now, they haven’t let most people down when it comes to crises handling.

What do you think? Are Indian carriers indeed doing it well, or is this a mirage? How soon do you think airlines in India will recover, and which international airlines would give them competition? Let’s discuss…

Feel free to share this article with your friends if you thinks they’ll find it enriching. At the same time, I’d like to invite you to subscribe SimpliFlying by email or RSS as well.

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Sometimes, competition can lead to funny outcomes. Here’s what happened at a major crossing in Mumbai, India, when Jet Airways announced their makeover.

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What’s wrong? Recession… nah, but surely something else is at play here too.

End of the peak season?

Airline officials argued in a recent news report that the drop was due to the end of the peak winter season. “The fall happens every season from January to August,” said an official. But I’d disagree that the slump can be so severe. It’s the end of the peak season, not the beginning of the low season! So, how can passenger numbers drop from 300+ per flight to just over 100?

The unspoken truth: travel agents’ boycott

The drop in traffic in India is due to a boycott from the travel agents, who have refused to sell Singapore Airlines tickets due to the latter’s refusal to give commission. “We sell around 90% of the airline’s tickets in India. When we stopped selling Singapore Airlines tickets from December 29, the passenger load fell drastically,” claimed Anil Punjabi, Travel Agents’ Federation of India Chairman in a Times of India article.

After months of agitation and deliberations, the Indian carriers like Jet Airways and Kingfisher have decided to five 3% commission to travel agents, but some foreign carriers like Singapore Airlines, British Airways and Delta Airlines have not budged, resulting in the boycott. But why is it such a bad situation, given that a similar policy is followed by international airlines across the western world?

Cultural sensitivity is key to brand sustainability

Many dilemmas in India are created by imitating the Western business models. Zero percent commission was one of them.  In India, travel agents play a vital role in the travel plans of people, unlike in the West, where the penetration, usage and payment gateways through the Internet are well known. Moreover, there are many small travel agents whose earnings solely depend on selling air tickets. The whole issue of zero percent smells of ignorance and cultural insensitivity on the part of airlines.

Hence, even though airlines like Singapore Airlines has a superb brand image in developing markets like India and China, it will do them no good if they cannot keep their channel partners happy. I feel that cultural awarness in developing markets and adopting them reaps good rewards in the long term, even though it may mean greater costs in the short term.

Two pieces of evidence to support my claim:

1. Virgin Atlantic’s latest advertisement in a local Indian magazine “TravTalk” reads: “It’s 5%. We’re 100% sure”. They’re referring to keeping the commissions to 5% for travel agents. Who do you think travel agents will recommend for flights to London from Delhi/Mumbai? Virgin Atlantic or British Airways (0%)?
2. I had featured an interview with Gary Leopold, CEO of ISM Boston, who had designed a very culturally relevant campaign for Emirates’ US markets. They recently won Best in Show, the highest accolade in the industry, at the HSMAI Adrian Awards in New York for their work with Emirates airlines.

So, how important do you think cultural sensitivity is to an international airline’s branding and operational strategy? After my interaction with Indian aviation executives, I certainly feel it’s one of the most important things for long-term success. Do you have other examples of airlines who’ve done it successfully?

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Over the past few months, I’ve had a chance to interact with some of the brighest minds of the airline industry as well as key brand leaders. Though these were all individual interviews, there was a common question in all of them – “What’re your thoughts about airlines and branding in 2009″.

I’ve now compiled them in the video below and you can hear the expert views of Lisa Markovic – VP of Sales & Marketing at Jet Airways, Joe Crump – VP of Strategic Planning at Razorfish, Rodney Abbot and Randall Stone – Senior Partners at Lippincott.

Their predictions?

Fewer airlines at the end of 2009

Lisa  of Jet Airways feels that this is probably the most difficult of recessions for the airline industry. She believes that the year ahead will see a number of consolidations in the industry, and generally the larger airlines will emerge as dominant players globally.

Focus on customer service and the brand

Rodney from Lippincott believes that the fewer airlines that survive will have to focus on the brand experience, because customers will be extremely picky about choosing a carrier that provides the best value. This way, not only will they retain existing customers, but also attract others disgruntled with the competition.

Mobility – in-flight wifi will be a hidden opportunity

Joe from Razorfish is looking forward to surfing the internet on-board airlines and is curious to see what opportunities arise from this developement. Moreover, he believes that “transactions” and “advertisements” will become much more seamless than they are right now.

Without any further revelations, I’ll let you enjoy the video yourself! I have to admit that two of these interviews have not been released on the site yet, so here’s a sneak preview for you!

Lisa sums her love for the airline industry the best, “it’s the dynamics, never a dull moment, always new challenges and I clearly don’t see any of that changing in the future.” That’s the reason I’m in love with the industry as well! Always keeps you on your feet, isn’t it? What’re your thoughts on where the industry is headed in 2009, and what role branding has to play?

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Image via Wikipedia

Jet Airways is relying heavily on ethnic marketing in the US to get in touch with its key target market of Non-Resident Indians (NRIs), and tapping on distribution networks like grocery stores to allow access to tickets! In this part 2 of the exclusive interview with Lisa Markovic, the Vice President of Sales and Marketing for Jet Airways in the US, shares with us ways in which Jet Airways is trying to trump the current economic crisis.

Flying through the current economy

Jet Airways has been targeting niche events such as Diwali celebrations and India Day Parade in the US to get targeted exposure with the people who regularly fly to India. Moreover, Lisa realizes that these customers “shop around a lot and do their homework before they make a purchase”, and hence Jet Airways offers a product that offers “great value”.

Alliances and more…

One of the mitigation strategies for the current crisis has been to form an alliance with rival Kingfisher Airlines. Lisa shares that this alliance  “really is code-share agreement” such that both the companies can jointly reduce costs on routes globally by sharing resources. Moreover, Lisa reveals that joining a global airline alliance is certainly on the cards for Jet Airways and we should hear about it soon.

I’d encourage you to listen to the 10 mins Part 2 of the interview to learn more about these initiatives and other details Lisa shares about how Jet Airways is aiming to emerge a top airline brand from this crisis.

In case you missed the first part of this interview, you may want to listen to it too. Lisa spoke about the marketing and branding strategies Jet Airways employs in the US and the challenges encountered while entering new markets.

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Lisa Markovic, Jet Airways

Jet Airways has been the shining star of the Indian aviation industry, especially in the past 5 years, since liberalization. The airline established itself as the harbinger of positive changes in the region, and currently offers one of the best service in the Indian skies, their numerous industry awards a proof of that.

A couple of years ago, Jet Airways started international operations and currently offers direct flights to key destinations in India from New York, via their hub in Brussels. However, of late, the airline has struggled with the rest of the world airlines due to fluctuating fuel prices and the economic troubles. Seeking to douse my curiosity on how Jet Airways is dealing with this, I decided to get the inside scoop by speaking with the expert.

In conversation with an industry veteran

In Part 1 of this two-part interview, Lisa Markovic, the Vice President of Sales and Marketing for Jet Airways in the US, talks about how work at Jet Airways is different from her 22 years at Lufthansa. She shares the unique challenges of differentiating the Jet Airways brand in the US, especially from JetBlue! She also talks about the unique marketing mix Jet Airways is aiming for in the US. When asked about the Jet Airways product and service, Lisa comments, “I’ve flown around the world on a number of airlines, but never came across anything like the product offering of Jet Airways.” I suggest you hear the rest from the lady herself.

Remember to tune in for Part 2 of this interview this Friday. Lisa will talk about how Jet Airways is tapping on “ethnic branding” in the US, planning for the future and what the Kingfisher alliance means.

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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…

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