This is a guest post by Jonathan Haysom, who is a respected marketer and business development strategist. Currently working for Australia’s number 1 telco and number 1 company by brand value, he is responsible for maintaining and growing a multi-billion dollar product portfolio focused on next generation products. He has recently received awards for innovation in marketing and accolades for his social media campaigns and brand strategies.

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Virgin Blue, after fighting hard as a “renegade” brand for a slice of the Australian carrier market is tipped to undergo a marketing face lift and re-invent itself as a full service brand. Some of the purported changes include the introduction of a new business class product, integrating the other brand properties (Polynesian Blue and V Australia) as well as the introduction of wide body aircraft on trunk routes between capitals.

(Image credit: ABC News)

Virgin Blue going upscale?

It is apparent from the changes the new CEO, Ex Qantas Senior exec John Borghetti is primarily going after the lucrative corporate segment of the market, one which Virgin Blue has traditionally struggled to break into due to Qantas’ having a strong and loyal customer base.

The biggest hurdle here will be to ramp up the company’s loyalty programs to make them attractive to corporate clients. The easiest way Virgin could do this besides upgrading it lounge system is to integrate with a global airline alliance, such as SkyTeam or Star Alliance, to boost its loyalty offering and expand code share operations.

It’s not going to be easy to attract new the new corporate business without impacting the most loyal customers who were attracted to the “renegade” brand. The shift away from competing head to head with other low cost carriers such as Tiger and Jet Star will surely allow it to focus more on its new customer acquisition path and deliver a more differentiated product. However it’s a delicate balance between attracting a new segment and not turning away the loyal customer base who share an affinity with the current culture and image.

Virgin Australia Airlines?

The other issue facing Virgin’s re-birth is the long-standing agreement between Virgin Atlantic Airways and significant shareholder Singapore Airlines prohibiting it from using the Virgin moniker for international flights.

I’d hasten to say the use of Virgin Australia Airlines, which was registered several years before the 2008 launch of V Australia will be the primary candidate to encompass all 3 brands.

Mr Borghetti has also recently swept the brands senior leadership team under the one reporting structure, not only implementing a few commercial side changes but also positioning Martin Daley as Product and Guest Services lead across the single carrier brand. Martin was one of the early Virgin Blue culture “creators” and will be integral to ensuring a consistent and on brand culture across all brand properties.

Finally, rationalisation of loss making routes across brands should also be on the cards as part of the marketing change out with yield being a primary focus of V Australia. A focus on greater diligence on revenue generation across the house of brands will be imperative once it becomes a branded house to ensure one branch of its network does not impact another’s profitability.

With most of the changes to come in before the end of the year, do you believe they can shake the low cost carrier moniker, bring the brands together and attract one of the most loyal market segments away from Qantas? Sounds like a big task, so let’s wish them all the best. And watch this space.

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SimpliFlying has earned its reputation over the years by offering thought provoking insights into the world of airline branding. And nothing has been as instrumental affecting airline brands as social media.

As airlines become more active in this sphere, we attempt to answer a crucial question: Has social media truly benefited any airline? If so, how? To answer this question, we put together a series of case studies. In this set of six case studies, top executives from airlines such as Qantas, Volaris, airBaltic, Alaska Airlines, JetBlue, and of course, Southwest, talk about how their social media strategies are pushing their airlines into the next era.

Recently, Facebook announced that its user base now exceeds 500m. Twitter, on the other hand is still lagging in numbers, but the growth rate of users easily outstrips that of Facebook. As our case studies will show, both of these platforms offer their unique advantages in terms of customer engagement and information sharing. However, more importantly, each requires its own unique strategy.

The heady growth of social media has brought its own advantages and ills. While platforms such as Facebook, Twitter, blogs and wikis offer unprecedented levels of engagement and information sharing with customers, there are perils as well. For instance, a clear line has to be drawn between what is “too little” and “too much”. This is not always an easy task. Our case studies will show why and much more!

We’re sure you’ll find these case studies inspiring and useful. Please click here to download the PDF containing all of the six case studies.

Special thanks to Shubhodeep Pal, Li Guen and Matt Brennan – all of whom have put in a lot of effort in helping bring these to shape. All feedback welcome at feedback@simpliflying.com

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Last week, I wrote an article for CNBC, which talked about the agility of Qantas that keeps the airline in profitable territory. The article resulted in a lively debate with a number of Aussie aviation experts down under, and one of them kindly offered to write a detailed Guest Post on SimpliFlying on how it’s actually Jetstar that’s keeping Qantas afloat.

Grant McHerron (aka Falcon124) is an opinionated aviation enthusiast & co-host of Plane Crazy Down Under, Australia’s only aviation podcast. He is an online/digital project manager and perpetual student pilot who can often be found crewing hot air balloons, working airside at Avalon Airshow and plane spotting at airports around the world. He graciousouly hosted me when I visited Melbourne last year, and we almost watched the sunrise in his hot-air balloon Enjoy!

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The latest half-yearly results from QANTAS continue to show an airline that is hemorrhaging cash on its mainline, full service routes. While QANTAS are certainly showing signs of agility, the primary factor keeping the group afloat is the success of their Low Cost Carrier brand Jetstar.

The creation of Jetstar

Towards the end of the 1990′s, QANTAS saw the writing on the wall as customers moved towards the Low Cost Carrier (LCC) model, sacrificing as much as possible to chase cheaper airfares (yet still complaining strenuously about lack of service despite paying next to nothing, but that’s a whole different article Like other airlines they decided to create their own LCC, launching Jetstar in 2004 by rebranding the Impulse Airlines LCC operation that QANTAS had previously purchased in 2001. Re-branding Impulse Airlines was important as it allowed QANTAS to utilise their equipment and, most importantly, their staff agreements.

These agreements have allowed Jetstar to pay their crew less and utilise them more than QANTAS mainline staff who are covered by agreements that are the result of decades of union strength and bargaining. This low cost base provides Jetstar with more room to reduce fares and compete against other LCCs.

Image Courtesy of stuff.co.nz

Jetstar complementing and competing with Qantas

Low fares have not been the only factor that has allowed QANTAS’ baby to survive & grow, unlike other LCC offshoots, such as MetroJet & Song. Competing with Virgin Blue and Tiger Airways, Jetstar are also taking over unprofitable routes from the QANTAS mainline brand, including the routes run by Australian Airlines, the low cost international operation that QANTAS had launched in 2002 but eventually folded in favour of Jetstar.

In response to Tiger Airways starting a Melbourne to Sydney service in 2009, QANTAS allowed Jetstar onto the route in direct competition with their own “City Flyer” high-frequency services. The route between Melbourne & Sydney is the world’s third busiest and features high numbers of corporate travellers commuting between the cities. QANTAS reasoned that with fares falling further thanks to Tiger’s arrival, they might as well try to capture the discount travellers and keep them “in house” rather than lose them entirely.

It was this introduction of Jetstar onto one of QANTAS’ domestic cash cow routes that spurred Alan Joyce to famously state there would be “no further Jetstarisation of QANTAS.” If only that were true.

The Jetstarisation of Qantas

Jetstar’s growth has survived challenges such as the Bird Flu epidemic, Swine Flu and now the global financial meltdown. In fact, the current crises appears to have helped drive more traffic to Jetstar as business travellers and other frequent flyers have had to face reality and reduce the size of their travel budgets.

QANTAS recognised the surging “flight to value” as their First Class cabins drained down into Business Class while business travelers wound up back into Economy Class. Many passengers were lost to other airlines on some routes in the mid 2000′s, apparently fuelled by QANTAS’ lack of any Premium Economy offerings. Many of us in Australia were wondering why QANTAS was slow to realise that frequent travelers often want space & comfort, something certainly not encountered in the cramped conditions of cattle class.

QANTAS did eventually introduce a premium economy service in April 2008, slowly expanding to most of their international routes by the end of 2008. While this helped retain customers, it was becoming clear that high-end premium traffic was not only down but may, in fact, never come back to QANTAS. With high end premium traffic down and growing competition from the top quality First Class offerings at Emirates and Singapore Airlines, QANTAS have taken the wise step and are removing first class from their remaining 747-400s and 8 of their A380s (those arriving in 2012 & beyond). They will still have a First Class offering on 12 of their A380s but are reducing the number of Business Class seats on those aircraft to provide space of more Premium Economy and Economy seats.

This is yet another step along the Jetstarisation of QANTAS, even though the aircraft are still under the mainline QANTAS brand. Additional steps towards Jetstar’s dominance include their current push into Asia and their intended use of 787s to open up Europe. It is perhaps no surprise that all the new jet services & routes that QANTAS is adding (or re-opening) appear to be under the Jetstar brand, not QANTAS itself.

Qantas for Business, Jetstar for everyone else?

Over at the Plane Crazy Down Under podcast, this ongoing movement towards Jetstar has us making reference to “QANTAS, a member of the Jetstar group.” We have also joked that the ultimate end point for Jetstar will be flying JQ branded high density A380s across the Pacific and into Europe. As Ben Sandilands has pointed out in a recent Plane Talking entry, this may very well become a reality if the 787-9 does not live up to original expectations.

If current trends in domestic & international airline passenger transport continue, it is clear that Jetstar will continue to gain market share as QANTAS reduce their mainline aircraft to only those routes that still have a good market for business class. It seems likely that Alan Joyce will eventually regret his comment that the Jetstarisation has ceased as it appears to be, if anything, speeding up.

• Australia’s Qantas Airways – the world’s most agile airline brand?
• Is Premium Economy here to stay? A brand review of All Nippon Airlines
• Five clever ways to earn frequent flier miles for upgrades
• Is business-class travel going extinct? Part 1 of 2
• The business of business class

This article was first published on the CNBC blog
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Qantas announced today a net profit after tax of A$58 million for the first half of the financial year, down from $210 million a year earlier, although the airline did recover from a loss in the second-half of last financial year. This 72% dip in profits resulted in the shares falling by up to 7.2% in early morning trades. However, Alan Joyce, the CEO, says the carrier has done better than most of its rivals. And it has, indeed, thanks to its agility.

Agility through smart cost-cutting

Although revenues dipped by 13.4%, costs were slashed by 16.2%, which shows Qantas’ diligence and discipline in reducing expenditure in the past year. The cutting of frequencies to unpopular routes and grounding of older aircrafts was key to these cost savings.

Load-factors have been the highest in five years – at 82.4%, on flights that carried a lesser number of total passengers as compared to the past year.

This simply means that flights were more full than in the past, despite the recession. Of course, the downside was that this was achieved by offering very low fares on certain routes, which are unsustainable in the long run. Alan Joyce eluded to this fact as well, by indicating that the industry’s survival depends on higher fares.

Agility in re-configuring the cabin

Qantas was one of the first airlines to add a Premium Economy cabin to their flights. Now, they’re standing by their decision by overhauling their cabins. Qantas will be removing First Class on most of its long-haul routes, with the exception of London and Los Angeles, and adding Premium Economy to their widebody jets.

This not just reflects the growing sentiment that Premium demand will change in the coming years, but also the fact that there are more First Class seats in the market than required. For example, from Sydney to London, a passenger has the choice to fly on First Class Suites on board Singapore Airlines, Emirates, Etihad, Qatar Airways and Qantas. Certainly a case of over-capacity.

Qantas is one of the first airlines in the world to remove the First Class in a systematic fashion, and change their long-haul plane configuration to Business, Premium Economy and Economy classes. This effectively increases the number of seats and hence reduces the cost per seat even further. Such agility will pay off for Qantas in the long term.

Leveraging on Jetstar

It’s a known fact that the two brand strategy, growing Jetstar aggressively, gives Qantas Group a very valuable option that few others can match. Jetstar’s profits tripled in the past year and continue to provide Qantas a very valuable asset to leverage on low-yielding routes. The two-brand strategy has also ensured that the Qantas Group doesn’t lag behind LCC competition from Virgin Blue and Tiger Airways.

Moreover, the recent Jetstar-AirAsia cost alliance should also help the airlines reap additional benefits in the near future through by tapping on each other’s scale and synergies.

In conclusion, even though profits have dipped, Qantas remains one of the most agile airline brands in the world and it’s this quick-thinking that will keep them ahead of most competition in the coming times. What do you think? Let’s discuss in the comments, and over on Twitter (@simpliFlying)

• The “Jetstar-isation” of Qantas is not over yet. Is the LCC taking over the legacy parent brand?
• Is Premium Economy here to stay? A brand review of All Nippon Airlines
• Five clever ways to earn frequent flier miles for upgrades
• Why a Qantas and British Airways merger is good (and why Qantas + Cathay Pacific will be even better!)
• The business of business class

Let me say this again. I think Air Asia is one of the most innovative airlines in the world today – right up there with JetBlue, Virgin, Singapore Airlines, Southwest Airlines and LAN Airlines. And today they pulled out a trump card – a joint venture with Australia’s Jetstar Airways. You can keep reading the press releases, but here’s the essence of the agreement and how it will benefit the airlines and their customers (you and I!)

What the AirAsia and Jetstar “budget alliance” means

The most significant difference is the departure from Star Alliance – type marketing or revenue driven alliances. Air Asia and Jetstar have formed a cost alliance, or what I’d call a “budget alliance” (pun intended). Here is the nitty gritty.

1. The airlines will pursue joint procurement of aircraft – This means that they will be able to leverage economies of scale while buying from Airbus.
2. Joint design specifications – since they’re going to order a lot of planes, they can demand from Airbus things like a twin-aisle A320 or more efficient engines suited for their own operations. I think this is HUGE!
3. Pooling of inventory and spare parts – both airlines operate only A320s and A330s, so this was an easy one
4. Combining Airport passenger and ramp handling services – this is crucial for cost savings as during an emergency, the airlines can use one another’s planes to carry passengers.
5. It’s a non-equity partnership – so both will work on reducing costs together, but will not share revenues.
6. There is no maintainance involved – this can get tricky, with different safety regulations in different countries and result in safety lapses. And I think Qantas has learnt its lessons with the failed partnership with Malaysia Airlines last year.

For the consumers, this means lower costs for both the airlines and benefits for all of us. Hurray!

Though, if I was working at Tiger Airways right now, I’d be worried. Especially with the upcoming IPO!

Why it’s a genius move, as shared Live at CNBC studios in Singapore

I spent this morning with CNBC’s Martin Soong & Sri Jegarajah sharing my thoughts about the joint venture Live on SquawkBox. The interview now available on CNBC’s website and I’ve embedded it here for your convenience. (Click here if you can’t view the video interview).

So, what do you think about this budget alliance? Is this the beginning of a new era for airline alliances? Will other LCCs or legacy carriers follow? Let’s discuss in the comments or over on Twitter (@simpliflying)

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It’s been a fascinating day, as an outside observer of the impasse between Singapore Airlines and Flight Center – one of Australia’s largest and most powerful travel agents (they’re actually much more than just an agent).

The Contradictions – SIA vs Flight Center

Late last night, SIA sent out an email to its Australian frequent fliers, which announced that the airline’s tickets will no longer be sold through Flight Center. That came as a shock, since it’s like saying your website won’t appear on Google.

But things got more interesting, when Flight Center put out a release countering what Singapore Airlines had said, claiming that they’re still selling SIA tickets, but it’s just not the preferred airline. What that means is if you want to fly from Sydney to London, Flight Center would recommend Emirates, Qantas or another airline, unless you insist on flying Singapore Airlines. And that can still mean a lot of business loss.

No lessons learnt from the Indian fiasco?

SIA flight attendants on flights to India used to be tired by the end of the flight, since loads were high and passengers demanding. But these days, nobody minds doing those flights because the loads are very light. That means less work. And this is because the airline has lost its major ticket sales channel in India for the past six months – the travel agents.

If you recall, late last year, travel agents in India boycotted Singapore Airlines because the airline refused to pay them commissions. And that, in a market where 90% of sales used to be through these agents. It inspired a highly debated article on SimpliFlying about the importance of adhering to cultural sensitivities. And now history seems to be repeating itself.

Adverse effects on a great airline brand

SIA had done a fantastic job of building up a formidable brand in India, through innovative promotions for over five years. But much of these were undermined when agents there refused to sell the airline’s tickets.

Down under, in Australia, SIA has been lobbying to fly the coveted Sydney-USA routes for some time now. And the Flight Center impasse may just hinder that bid. Moreover, the potential impact of losing out on the cash-cow route Kangaroo route from Sydney to London may give competitors like Emirates and Qantas the boost they needed. Add to all this the difficult economic times and record recent revenue drops and you can imagine the trouble SIA might find itself in.

I love flying Singapore Airlines and would rather not see this happening to them. May be it’s the flight of top executives over the years to other carriers. May be its the knee-jerk reactions to save costs in the down turn. May be it’s just bad luck.

What do you think caused this? What do you think SIA can do to emerge out of this? Let’s discuss…

P.S: Special thanks to @MatthewPDavis who’s been updating me about this news.

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Gone are the days when we received some unknown meat topped with a squishy brown liquid and neon green vegetables on board airlines. These days, either we don’t receive anything for free ($2 for water anyone? Think US Airways ), or we receive peanuts (think Southwest) or are over-fed (think Qatar Airways). But which airlines serve the best food?

Food on Singapore Airlines - pretty good, but not the best

This article is inspired from a review SimpliFlying has received, which notes that there is hardly any talk about food quality on board airlines on this blog. Indeed, food quality and serivce forms an integral part of the flight experience – especially for long haul flights. In fact, it can sometimes be crucial to winning the customers hearts, as Malaysia Airlines CEO realized. They had been serving mutton biryani on routes to China, and customers didn’t like it. They switched to chicken rice, and won their hearts. At the same time, they started offering mutton biryani on flights to Delhi, which was well received too.

Personally, I’ve been pre-selecting Indian non-veg meals, across Star Alliance and Oneworld carriers. Though I’ve flown Singapore Airlines quite a lot, I wouldn’t rate their food as my favorite. My best culinary experiences at 35,000 feet have been on-board Qantas (SIN-FRA), Cathay Pacific (JFK-HKG) and Air Sahara (now, JetLite. SIN-DEL).

But what constitutes good food on board airlines? Quality? Quantity? Timing? Or cultural appropriateness? Which airlines serve the best food? Let’s hear it in the comments section (remember, you can win a 2GB iPod, just by commenting!).

If you found this SimpliFlying article enriching, I hope you’ll pass it on to your friends and encourage them to subscribe by email or RSS for regular updates. Thanks.

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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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Qantas became the third airline to take delivery of the Airbus A380 aircraft last Friday, after Singapore Airlines and Emirates. Qantas has ordered 20 A380 planes from Airbus, the first of which will enter service from October 20, initially flying between Sydney/Melbourne and Los Angeles but in January next year expanding to the Sydney-Singapore and Sydney-London routes. But the fanfare and buzz is nothing close to that generated by Singapore Airlines’ first A380 flight to Sydney or Emirates’ A380 flight to New York City.

Given the significance of being one of the first few airlines to operate the Airbus A380, and since it will once be the 2nd largest operator of the A380, it’s a mystery why Qantas has not capitalized on this event to build its brand further. Moreover, given the recent negative press generated by the string of Qantas safety lapses, there is an urgent need to repair the damage done.

How did Qantas miss this golden opportunity?

1. Lack of radical product innovation: The four classes Qantas product for the A380 are not a radical improvement from its existing fleet of wide body planes. Moreover, the peculiar seat color choices make the cabin look dull. This, as opposed to the double-bed suites introduced by Singapore Airlines for First Class, and showers as well as a bar introduced by Emirates for First and Business Class, in their A380 planes. Both of these airlines took full advantage of these product innovations and marketed themselves well, rightly so.
2. Retracting some service features: Qantas has shelved plans to offer live internet access on its A380 planes from next month as American Airlines comes under fire from customers and flight attendants for allowing passengers to surf porn websites. Last year Qantas general manager John Borghetti was talking up the inflight entertainment system on the A380s, saying “there has never been anything like this on board a commercial aircraft”.But the lack of a full internet service will most likely disappoint many passengers who will have to make do with a limited selection of “cached internet content”. This will be a turn off for some passengers, who were probably looking forward to being connected while they cross the Pacific. Moreover, there is little official explanation given to why the service was retracted.
3. Lack of customer engagement and buzz at launch. Singapore Airlines created an eBay auction for its first A380 flight. Emirates treated an exclusive group of VIPs and media folks to a joy-ride once they landed the big bird in the US. Qantas, ironically, is keeping the event pretty low-key. In an official response from Qantas, this blog was told that, “Much of our media related activity around the delivery and entry into service will take place in Australia, with a very small contingent to be in the first flight on 20 October”. But why? Why not leverage this special event to build the brand further and engage the customers? We wonder.

What can Qantas do now to leverage on the A380 launch?

It’s probably too difficult and expensive to overhaul the product right away. So, it’s got to be marketing what they’ve got well. May be Qantas can play up the fact that they will be the 2nd largest operator of the largest commercial plane in the world. May be they can highlight their in-flight service and the new uniforms. May be, they can come up with better advertisements showcasing their A380 product features,and not just the plane from the outside.

What do you think? How can Qantas lift up their brand image with the first A380 take off in Kangaroo colors? Let’s discuss.

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Which of the first few airlines operating the Airbus A380 have come up with the best advertisements? You be the judge. Personally, I’d rate Emirates’ and Singapore Airlines’ advertisements far above Qantas’.

Singapore Airlines Airbus A380 advertisement

Emirates Airbus A380 advertisement

Qantas Airbus A380 advertisement

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