SimpliFlying » Virgin Blue

Re-birth of the Virgin Blue brand – will it work?

Shashank Nigam — Mon, 02 Aug 2010 15:06:18 +0000

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.

Is Southwest Airlines model the future for full-service airlines?

Shashank Nigam — Mon, 23 Mar 2009 09:31:48 +0000

Recently, the Centre for Asia-Pacific Aviation (CAPA) published a report which concluded that the “full-service airline model break down in the new-world order“.

“Worldwide, the number of passengers travelling on First or Business class tickets fell by 16.7% in Jan-2009, a further substantial fall from Dec-2008 levels, which were 13.3% down on the year.”

That means that legacy airlines, which made a majority of their money from premium passengers, are struggling, even as low-cost carriers see greater traffic from people downgrading and new people taking to the skies.

What does the future full service airline model look like?

Here’s my prediction.

It will consist of airlines charging for providing value added services, rather than those un-bundling their products. Moreover, customer service will become a key brand distinction for the full-service airline, as prices would generally be competitive and so would most of the in-flight products too. The savvy traveler of the future will not only hunt the lowest prices, but be loyal to the airline that treats him well. Lastly and most importantly, employees of the full service airline will be part of the family, and share the love with customers at every touch point too (up to 16 per customer!).

Which airline is closest to the future? Southwest.

A lot of you might be wondering why I picked Southwest. Since that’s the airline that led the low-cost carrier (LCC) revolution. But I feel even among the LCCs, there is a a huge disparity. At one end, there’s RyanAir, which might just charge for the loo and intends to remove all check-in counters very soon. And at the other end is Southwest, Virgin Blue and JetBlue, which offer a number of value added services, yet maintain a low price.

Here’s a comparison table I’ve drawn of Southwest Airlines and the full-service carrier of the future.

What do you think? What does the future of full-service airlines look like to you? Do you think Southwest is a good indication of the future or are there better examples too?

Ancillary revenues and airline branding Special in March at SimpliFlying

Shashank Nigam — Mon, 02 Mar 2009 04:53:52 +0000

: Image via Wikipedia

Dear Readers,

I hope you enjoyed the India Special in February on SimpliFlying, where I featured case-studies and interviews on airline branding in India, including that of the COO of SpiceJet and COO of Indigo Airlines. I received an overwhelming response to these articles too. Hence, I’ve decided to make the first fortnight in March, the Ancillary Revenues Special.

Ancillary revenues + airline branding = Even greater profits!

Why, ancillary revenues, you may think. That’s because it becomes an extremely powerful concept when in sync with the brand strategy. For example, when you fly Singapore Airlines, you don’t imagine paying for food on-board, due to their brand positioning as a premium airline. And that’s why their decision to charge for emergency row seats came as a shock to many. This is because the ancillary revenue strategy did not resonate with the brand strategy. Hence, the aim of this special feature will be to feature case studies, interviews and analysis on how airlines can leverage their brand while building multiple sources of income.

Still not convinced, here’re some ancillary revenue statistics to whet your appetite:

EasyJet earning £77m or an extra £3.81 per seat
Ryanair generating £221m in ancillary revenue
LCCs at the World Low Cost Airline Congress aiming for ancillary revenues of 10-20%
63% of airline managers believe unbundling is the future
Major airline brands becoming one stop shops that offer all travel products
Increase brand reputation and loyalty by offering products that enhance the travel experience
AirAsia’s ancillary revenue grew by 77% allowing fares to go down 2%
SkyEurope generating 18% of revenue from ancillary products and services
Virgin Blue’s ancillary revenue equivilant to the yearly operating costs of 4 planes

If you haven’t already done so, I’d like to invite you to subscribe SimpliFlying by email or RSS so that you can get the updates from the convenience of your inbox.

Keep soaring,
Shashank