Business-Only Airlines Strive For Balance
Oct 2007
The air travel industry is entering a new phase of development, with private, charter and all-business class carriers, vying for a slice of an increasingly lucrative business market. The new breed of business-class airlines is expanding rapidly - the last twelve months have seen a regular occurrence of new names entering the market. Encouraged by the transatlantic 'open skies' agreement and fuelled by supply, these players have now set their sights on growth - adding aircraft and extending the reach of their original networks.
In 2005, US-based carriers Eos Airlines and MAXjet launched, changing the face of the business travel industry. They were quickly followed by UK start-up Silverjet (see Pearlfinders UK 18.12.06). Since then, Silverjet has resolutely pursued expansion, boosting its marketing and communications management teams (see Pearlfinders UK 10.08.07 & UK 20.07.07), and developing a Silverjet-dedicated area of Luton airport, modelled on a private jet facility. We've spoken to the Silverjet Sales & Marketing Director, who outlined the result of ongoing market research - establishing the airline's target demographic as small and medium-sized business executives who "want to be able to work the next day" and require an element of ease, rather than the mere exclusivity traditionally associated with so-called 'business class'. He had also found that aside from delays, the biggest passenger grievance is the time taken to check in and pass through security - Silverjet's terminal was created to speed up the process and give passengers a chance to relax in the midst of the ordinarily stressful routine of a business trip.
Rival French carrier Elysair, under its operating name of L'Avion, is similarly expanding, announcing it will offer additional flights from Paris Orly to New York Newark (see Pearlfinders UK 23.10.07). Starting at the end of this year, a daily service will be launched, with frequency doubling in January, and claiming "the highest quality for a reasonable price" for the route on the market. The company told us an area they're eager to explore is sponsorship and events activity to support the strategy. Though the company's target audience is primarily the corporate market, a move to the leisure market is potentially on the cards.
Now, Eos is expanding its schedule to up to four flights between JFK and Stansted, and is negotiating to have its seventh and eighth aircraft in service by the end of next year. Having been through three rounds of funding in the time it's taken Silverjet and L'Avion to find their feet, it recently secured a further $50m. When we spoke to Eos Director Corporate Communications (see Pearlfinders US 15.08.07), he emphasised the importance of community, and noted there may be scope for exploring business networking services in future, or online initiatives to promote this aspect. He said Eos's audience is young, affluent and style-conscious, with an awareness of the value of networking for business and leisure: an element he'd like to harness and develop in future. Unusually, however, he told us Eos doesn't like the word "airline" - its passengers are clients for the duration of an "end to end guest experience". A priority, therefore, is growing the brand as a lifestyle choice, and creating emotional attachments. Finally, Eos's aim is to differentiate itself from competition under the banner of "uncrowded travel".
In contrast, private airline XOJet is aiming to find success by targeting an audience of wealthy private equity and investment groups, who might buy 500-800 hours of flight time and share it amongst three or four employees (see Pearlfinders US 05.09.07). The company's CMO told us he needs agencies that understand "the C-level business executive and high net-worth person's mindset". Instead, he said he often receives "a load of rubbish from firms who focus on luxury brands focused on upper middle class or aspirational wealth segments, or firms that have experience marketing toward CIOs or lower level executives". His marketing communications spend prioritises direct communications aimed at client retention and acquisition of prospects currently using private jets. A further 25 per cent of spend goes to direct marketing with 25 per cent on advertising and PR. Shunning the "lifestyle positioning" currently in vogue, he prefers to communicate more in the language of business - focusing on consumers' immediate needs rather than aspirational brand building and whimsical images.
Even charter airlines, often spurned by the discerning, are hoping to get in on the act. We spoke to the JetBird Managing Director (see Pearlfinders UK 26.09.07), who posed an "interesting challenge" for agencies to catch his attention before the business takes delivery of its first jet in April 2009. He identified a need for a "deep knowledge base" for targeting upper-middle class business travellers, hoping those who normally use business class on commercial jets will recognise they now have an alternative. As well as corporate markets, he estimates that around 15-20 per cent of JetBird's clients will be from the leisure market with high levels of disposable income. Surprisingly, his priority will be to target this audience through localised marketing, and he told us he's likely to avoid national press and work instead with regional agencies with local advertising expertise.
With the continued emergence of these businesses, established airlines like BA and Virgin Atlantic have been forced to devise a response. Virgin Atlantic's Head of Business Opportunities told us about the development of an all-premium transatlantic service of its own (see Pearlfinders UK 05.06.07), saying the launch would mirror that of a new airline, accompanied by both above and below-the-line initiatives to promote awareness of the concept. Drawing from the well-established Virgin Atlantic name, it's believed the service will include routes to NYC and other US hubs from Paris, Frankfurt, Milan, Amsterdam and Zurich. However, analysts have questioned how the all-business service will fit into Virgin's existing range of flight options, and have challenged VA's ability to position its offering in an effective enough way to rival the new dedicated carriers - deeming this a copy-cat catch-up scenario.
Aiming squarely at existing rivals, Virgin Atlantic has said the service will offer better quality at lower prices than Eos and MAXjet. However, all are at risk of spouting a familiar refrain. In citing a priority of reconciling business-class positioning with affordable fares, not only is there little differentiation, but also basic strategic conflicts become clear. Our contacts at Silverjet summed up the airline's image as one of "accessible luxury" - easily a confused standpoint. Nevertheless, it's one that it's crucial for these brands to strike, particularly with most relying on affordability as the single distinguishing quality between their service and that of the business-class sections of existing airlines. A question then that will need to be addressed is whether an emphasis on "value for money" might threaten brand positioning.
With competition growing fiercer, it seems marketing opportunities should be burgeoning. But in your prospecting, remember the relative consensus among the decision-makers we've spoken to: generic luxury tactics do a disservice to the business-class airline model. While some favour the "lifestyle" approach, and some take a more pragmatic, corporate stance, customer acquisition is as always the universal priority. Some face the additional challenge of establishing a new brand in an increasingly foggy market - in which consumers have been given little cause to distinguish between one "all-new, all-business airline" and another. Meanwhile, the legacy carriers now diversifying into this sector must consider how best to bring a recognised brand to a new domain. Many questions are raised - and offer a distinct advantage to marketing communications agencies able to present answers.