Before you raise your eyebrows, let me declare that yes, I do know why you might be slightly surprised to read the title of this article. You might say that LCCs exist to carry customers cheaply from one point to another without offering peripheral services or caring about customer loyalty because everyone will come if your price is low, right? You might say that LCCs themselves couldn’t care less about cultivating loyalty or building loyalty programs because that would be an unnecessary investment of time and resources. Right? Wrong! This article will build on the premise that while LCCs have been doing one L (low-cost) well, they need to start thinking about an equally important L – loyalty!

Before I go on to my thesis, let me state upfront that I am not talking about creating loyalty programs. I’m only concerned with creating loyal customers or, to put it in the simplest and most compelling terms: driving repeat business for LCCs. There are some compelling reasons for LCCs to start thinking about building a loyal flyerbase. Five of them are listed below.

1. First, and perhaps the most easily identifiable reason: it has been known since long that getting a new customer is much more difficult and resource-consuming than keeping a customer loyal.
2. Second, with the growth in the number of LCCs in markets, a number of carriers are fighting for their share of the pie. With fuel costs (and consequently, operating costs) rising much faster than passenger numbers, carriers that have the highest load factors will win the battle for survival.
3. Third, given that fuel costs are hurting all carriers, a battle to fill capacities based on price-cuts will not just hurt the carriers but the industry and wider economy. No example for this can be better than that of the Indian market where the troubled national carrier Air India indulged in heavy price-slashing leading to a domino effect of reduced profits (in fact, heavy losses) industry-wide.
4. Fourth, given that most major markets have multiple LCCs in competing closely (including on prices), there is a need for secondary differentiation factors that would help in customer retention.
5. Fifth, and perhaps incidentally, the present state of the economy has compelled many price cuts within businesses. As a result, many companies have taken to flying LCCs for short-haul travel. Agreed that this might not be a huge population, but a seasoned business traveller flying on a no-frills airline for the first time would definitely look to fly the LCC that offers the most value even at the low-cost.

So what can you, as an LCC do to actually drive repeat business via loyal customers? First, think like a person who’s flying you multiple times a year. Even though the frequent-flyer concept is not applied to the LCC market, it is undeniable that there are people who do fly you frequently. (I have a relative who flies the same LCC twice a week just because its on-time performance is impeccable!)

Small things matter. Work on the small ways you can make a difference to your loyal customers. Second, understand from the example I just gave that even though small things make a big difference to customers (eg. on-time performance) they will not be enough to drive repeat business until loyal customers are identified and told specifically that they are being rewarded for being loyal.

So here’s my golden tip for today: Make those who fly you frequently feel special in small ways.

P.S. If you’re an LCC and have the understandable question of how on earth you’ll track loyal customers without setting up a loyalty program and going through an IT headache, watch out for the next part in this series that’ll show you three easy ways to track loyal customers.

• Three easy ways for low-cost carriers to track loyal customers
• Five (nearly) zero-cost solutions for low-cost carriers to reward loyal customers and drive loyalty
• Three keys to making loyalty programs work for the airline brand of the future
• [Presentation] Why the future of loyalty programs will be social-media based
• Loyalty 2.0 | The Top 10 Social Loyalty Initiatives by Airlines

Scoot will be flying ex-Singapore Airlines Boeing 777s to Australia and China initially, then expanding the fleet to 16 aircraft by 2016 and adding destinations too.

From a PR perspective, I’d say this is close to a dream launch. After all, the aim is to get the world talking about it, even if the brand is polarizing.

A polarizing brand gets [famous] people talking

Remember Rico? The furry Air New Zealand mascot? Just as many people hated him as those who loved him. The same can be said about Richard Branson’s acts when promoting the Virgin brand – you either love him or hate him.

When it comes to branding, a polarizing image not only gets people talking passionately – they take sides and defend themselves too. The result may not be the most loved brand, but certainly the most talked about brand. And that is what a new airline like Scoot needs right now – to have famous people talking about it.

Within minutes of the press conference announcing the launch, most aviation journalists were talking about Scoot, and even Tony Fernandes tweeted about it.

So if I fly Scoot, that makes me a Scooter? And with that lame joke, it's time for me to Scoot off to bed :)

October 31, 2011 11:51 pm via EchofonReplyRetweetFavorite

@ghimlay

Ghim-Lay Yeo 杨锦丽

Ladies and gentleman: Singapore Airlines has done it. LCC to be called "Scoot". But the livery is worse: http://t.co/23UZCNEA

November 1, 2011 12:41 am via Twitter for iPhoneReplyRetweetFavorite

@winglets747

Will Horton

An airline with an attitude – Scootitude!

All this chatter among people around the world instantly forms impressions and gives an airline brand a personality. And Scoot has done a good job by trademarking the word “Scootitude” – reflecting the attitude of the airline and potentially its future customers too.

“Besides difference, it conveys spontaneity, movement, informality and a touch of quirkiness—all attributes we intend this Company to be known for,” said Scoot CEO Campbell Wilson.

In today’s world, people no longer relate to faceless corporate entities that most airlines and airports are. They connect with brand personalities and the attitudes reflected by a brand. So, “Scootitude” is a step in the right direction. It will be interesting to see how this evolves and how customers play a role in building the brand.

Lots of opportunity – time to act!

I guess someone at Scoot read our previous article on what they should do differently with this airline!

They have done a good job starting with a Facebook page on Day 1. This is important because a traditional website only offers limited interaction. Whereas on a Facebook fanpage, people can interact and have a conversation not just with the brand, but among themselves too. And this is a golden opportunity for Scoot to start forming a community.

I just wish they had a Twitter account too, so as to channel all the conversation towards them, and engaging with key influencers directly. Hopefully this will come soon.

As I’ve often said in my keynotes and panels to airline executives, an airline brand is not what you say it is – it’s what they say it is. Scoot has a rare opportunity to involve the potential customers in the brand creation process of this new airline. For starters, they can look at how the best airlines in the world are crowd sourcing ideas. And then wholeheartedly embrace the customer.

The road ahead is exciting and I’m sure avgeeks like us will be watching keenly!

• Southwest Airlines engages customers with blogging competition
• “Chris Brogan: If I was an airline CEO.” Exclusive video interview with the social media mogul
• Greg Hounslow is the SimpliFlying Hero for April leading WestJet into the new age of social media
• Five lessons in crises handling from the Facebook war between Ryanair and SAS Scandinavian Airlines
• Top 11 marketing and social media innovations by airlines in 2011

• Singapore Girl – you’re a cheap way to fly…or are you? Making the low cost Singapore Airlines brand work
• Ryanair’s New Fee To ‘Check In’ & The Real Cost Of Some Low Cost Carriers
• Five Reasons for low cost airlines to take loyalty seriously
• LCC 2.0: How low cost airlines can use social media to engage their customers
• Will the Scoot brand fly? Singapore Airlines’ low cost long haul airline raising eyebrows

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

• Is Southwest Airlines model the future for full-service airlines?
• Why Air Asia’s “budget alliance” with Qantas and Jetstar is a stroke of genius – Live on CNBC Asia with Martin Soong
• How business lessons from AirAsia can rescue the battered Air India brand
• Why the Southwest and WestJet alliance is good for both the brands
• Why LiveTV is a great idea from JetBlue Airways, to help them fly through a recession and keep the brand alive

LCCs have started serving multiple P2P sections, effectively like a hub and spoke model. Tiger Airways customers can book two flights in one booking using their Flight Combo feature, effectively being able to travel from Chennai to Perth via Singapore, or from Darwin to Hanoi via Singapore. Air Berlin in Europe allows similar flexibility to passengers, flying via Düsseldorf in Germany.

Tiger Airways route map

The latest kid on the block is Air Arabia, the extremely popular Sharjah, UAE based airline. As mentioned on Popagandhi, they have formed a joint-venture with Nepal’s Yeti Airlines to launch a new budget carrier flyyeti.com, offering destinations in Southeast Asia and even Hong Kong based out of Kathmandu. So you can fly from Yerevan, Armenia to Hong Kong via Sharjah and Kathmandu (I’ve been to Armenia, and trust me, it’s not easy to get to that place, and you don’t want to fly Aeroflot). So why does this make sense for LCCs?

According to the ITA travel blog, “This is a great idea as it saves you having to work out if both flights you need are available and you save an extra booking fee.” Not only that, you can travel from places that were previously very poorly connected – like flights from Jaipur, India to Bangkok, Thailand (the layover in Nepal can’t be that bad). For the airline, this often means greater passenger loads for under-performing routes. Also, they can capture the attention of the passenger for much longer, and impress them so much that they come back for more. Can’t ask for more!

Though this sounds rosy, there are two concerns most passengers are likely have:
1) How long can I stay without food, water and entertainment?
2) Am I willing to pick up your baggage from the belt and re-check it in to the next flight?

Nevertheless, this is a step in the right direction. It shows that the brains in these airlines are well greased. It’s these innovative ideas that will keep them ahead in the industry.

Ponder that!

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This is the first article in the Low Cost Carrier series. The next one comes out on Monday, 19 June and it will be about how LCCs are beating the competition in their own unique ways. Keep a lookout for it!

• Five reasons why budget airlines in Asia are successful
• Low cost airline brands get creative with ancillary revenues – lounges, shops and cargo!
• Cartoon of the day and more airline humor
• Why Air Asia’s “budget alliance” with Qantas and Jetstar is a stroke of genius – Live on CNBC Asia with Martin Soong
• Singapore Airlines – Time for re-branding?