By Stuart Green
On a macro level, the perennial foe of the airline industry, “oil prices,” continues to negatively impact profitability. Expected fuel increases have led IATA to downgrade the global profit outlook for 2013 to $3 billion, with a 0.5% profit margin.
Europe remains the biggest drag on global profits while the US, Asia Pacific and the Middle East are all in the black. Although higher fuel costs will more than halve profits this year in Asia, the region’s relatively strong economies and changing demographics will continue to generate more rapid growth in travel and cargo.
Despite this mixed economic picture, airlines continue to embrace a blend of traditional and digital platforms to “get bums on seats” and enhance the experience for their customers.
Airline customers are increasingly experienced flyers and growing ever more discriminating and demanding. As a result of ongoing industry deregulation, improved technologies, and the emergence of new business models, consumers have more choices than ever. Interested in shopping around for the best deal and the most attractive package of services, consumers routinely ignore more traditional marketing channels, pushing airline brands to find new ways to reach and engage them.
Virgin America recently established a dedicated, interactive website to bring its brand experience to life. Branded by the airline as an “immersive digital portal,” the site offers an interactive, virtual tour through a Virgin America cabin. At the site, customers can submit Instagram images of their Virgin America experience and post messages and Tweets with the hashtag #myVXexperience. The brand has also set up a #myVXexperience pinboard on Pinterest to share customer submissions to that platform's audience.
Delta has a new sponsorship deal with Chelsea Football Club, following similar partnerships with the Atlanta Braves and the Minnesota Twins American baseball teams. As part of this new partnership, the first Sky360 lounge outside the US will open at Chelsea's home stadium in London. The Stamford Bridge lounge will host VIP guests of official Delta partners on match-days providing a Delta-branded experience through features such as airline-style tickets inviting attendees to "check-in" for matches and an LED-lit runway leading guests to a dedicated entrance to watch football games.
China’s outbound tourism is growing at 20% per annum. As a result, airlines, airports and tourism destinations around the world are rolling out the red carpet to make Chinese travelers feel special. Frankfurt airport now offers a personal shopping service where attendants speak fluent Mandarin and are familiar with the culture and preferences of the passenger.
Services include helping passengers make purchasing decisions through translation of products, getting refunds on VAT, and escorting them through security checks and onward to departure. Additionally, Frankfurt airport launched a Chinese version of its mobile app and is looking into introducing personal shoppers for Russian passengers.
Mobile boarding passes, compatible with Apple’s new Passbook functionality, are being rolled out around the world. Apple’s new Passbook is a digital wallet that can store boarding passes, movie tickets and membership cards. Passengers of United, Delta, Malaysia Airlines, Lufthansa and Virgin, upon arrival at the airport, get an image of their boarding pass on-screen, which can include information such as gate changes or seat assignment. Uses will include proactive management and dissemination of timely information to flyers, such as rebooking options, updated baggage tracking, reimbursement vouchers and storing coupons for ancillary services like premium lounge access.
"There must be a holistic vision for each airline brand that not only drives all experiences, but is also grounded in deep consumer insights"
Digital platforms are now the norm with airlines around the world using mobile phone applications and social media networks to advertise, engage, build customer databases and sell travel deals/fares. The more savvy airlines are using social media to drive real results for their business through mobile marketing campaigns, managing customer service management, crisis management as well as experimenting with new social media platforms to attract new customers and widen their communities.
However, building brand value will require a genuine integration between the online and offline experience. As well as meeting short-term sales goals through social marketing, there must be a holistic vision for each airline brand that not only drives all experiences, but is also grounded in deep consumer insights around how people choose and why they remain loyal.