IN FOCUS: The complex reality of online airline marketing

By:  
-
Source:
This story is sourced from Airline Business
Subscribe today »

Peter Morris, chief economist at Flightglobal advisory arm Ascend, considers how the reality of airline marketing in the era of social media belies the possibilities that the internet once promised

Since the origins of airline marketing, a dispute has raged about whether this concept should be a one-way or two-way process.

While the involvement of the customer has always been said to be important, the practicality of this involvement has been a major stumbling block. In airline marketing, it is most certainly a case of "the many and the few" - how to target the few among the masses. "The many" may come in every conceivable shape and size, gender, age, nationality and with different reasons for their purchases, and they all seem to be rather focused and knowledgeable.

Any conversation started by an airline to engage customers rapidly becomes a chaotic din, and in many cases, following a successful campaign dialogue, the airline's marketing team will consider nervously how to ask the chief executive for extra resources as a result of that success.

The arrival of the internet brought a revolution, at least in theory. The cost of two-way communication suddenly plummeted, and the multiple channels offered by the platform provided airlines "something for nothing" on the marketing front. The airlines' first efforts were not impressive, however. I recall receiving a personalised email in 2003 from the frequent flyer programme of a leading European airline inviting me to take up a special offer. Clicking on the offer brought me to the public website, on which there was no sight or sound of the offer. Yet the friendly email from "Sarah Brown, marketing manager", as I will call her, encouraged me to get in touch if there were any problems. There was no phone number, no note indicating that "any reply to this address will be ignored". Clicking on "contact us" brought me back to the same website, where guesswork had to be employed while I filled in a form. After sending off the form, there was no reply. Two weeks later, an acknowledgement came that my form had been received. Then silence. After 10 years, I guess I will have to pass up on that particular offer. Later, I learnt from an insider at the airline that "Sarah" was not just absent-minded - she did not even exist. This was one-way communication with a vengeance, and I wonder if anyone noticed that the offer had flopped.

Years later, the quality of internet communication has improved, but it is quite clear that personalised issues are discouraged. There are lots of offers and web links generally work, but don't even try to ask if you can take a disabled child with you, or if a mileage deal with an airline applies in your country.

Getting personal

One big dream for the internet was that it would allow personalisation in marketing and recognition. I recall endless internal industry examples in the early 2000s, such as: "Mr Smith, you have travelled 10 times to Japan with us in the last year, how about taking your wife next time for half price?" Two things have always worried me about this. Firstly, how costly were the people and systems needed to set up, check and verify these algorithms in the airline's systems? Secondly, what if Mr Smith already had a companion? The problem is people and their journeys are infinitely complex and constantly changing. This is even before considering that everyone will want the offer once word gets around within the business travel networks that you can take your wife with airline X at half price.

For airlines, the options for two-way marketing channels are terrifyingly divergent. The channels are not being substituted, and phone lines, for example, are only partly being replaced by email, Twitter feeds, marketing blogs, personal blogs, media blogs or videos - and the list continues to grow. Even now, there is probably paralysis when an airline receives an elegantly handwritten letter, with responses such as: "Who deals with these now that we have gone paperless?" No sooner does the airline get up to speed on Twitter before viral videos become all the rage. And the quality and precision of business traveller responses on so many "run for free" travel sites surely make airline marketing executives flinch. Perhaps it is not for nothing that Ryanair has ruled out using Twitter.

On the distribution front, the shiny new dashboards of airlines' websites brought hopes that the tool would remove the need for intermediary travel agents, giving airlines a windfall gain of more than 10% in reduced selling costs. The difficulty, however, was that travel agencies represent an independent channel that customers know and trust as a broker. My first memory of making a booking on an airline website was being offered a full-fare ticket with a £5 credit card charge. A travel agency offered the same seat online at a 33% discount. It was no contest between the two. In fact, in some of our surveys of business travellers, it is clear that customers often trust the agent, not the airline, to get the best deal.

In this area, I think all airlines have to be indebted to European low-cost carriers, which simply cut to the chase in their development of online services - make it easy, make it cheap, and the customer will buy direct; make it complicated, offer customers high fares, and they will go elsewhere.

Where is airline marketing headed? The technical and behavioural landscape will continue to change, from competition between airlines to the communication channels and devices for customers. The process will be brutally Darwinian, with only the fittest expected to survive. The only advice that will stand the test of time is firstly, look at the cost benefit from the customers' viewpoint. Secondly, focus on a few key strategies in which you have strength in depth, and always compare yourself with your peers. After that, you will need a fair bit of luck.

Peter Morris is chief economist at Flightglobal's advisory service Ascend. His expertise is in strategic and economic studies, forecasts, traffic, capacity, revenue and cost analyses