The aviation industry had an exciting announcement today, which promises to bring new intelligence to stakeholders and improve the passenger experience.
The partnership between Raymond Kollau industry analyst at trendwatching.com and founder of airlinetrends.com, and noted designer Daniel Baron of LIFT Strategic Design, aims to deliver fresh insights and strategies to airlines to improve their brand and their passenger experience.
“The PAXEX360 workshops familiarise airline management with trends around the world in every phase of the customer journey, from technology to marketing, and from design to service delivery,” the new partners stated in their announcement. “Key representatives then explore their own customer experience development in the context of trends, identifying target areas for future action. Potential topics of discussion include brand strategy and positioning, product development and implementation, design, marketing communications and internal organisation.”
Knowing how to balance the needs of industry and the needs of the flying public is no easy feat. For many years, a brave few have insisted that airlines consider the greater benefit of building strong brand based on product and services and compete on these factors rather than focusing on fares. It is one of the unfortunate carryover impacts of deregulation that airlines had to first learn to operate as profitable businesses and have yet to learn how to fully operate as competitive brands. I remember many years ago, tired of hearing repeated objections to innovative product improvements with arguments that aviation is a commodity, I pointed out to a group-in-the-know that, while that might be true, people still pay more for Dixie sugar and Morton’s salt. This raised eyebrows. It was an argument only a foodie could make, but it’s no less true.
With the rise of Low Cost Carriers over this same period, traditional airlines have reacted by lowering standards of service and product, and cutting costs to match fares. It was an understandable reaction, to protect routes, but has not proven effective. Were it not for mass consolidation, many airlines would still be unprofitable. In fact, most airlines show insignificant profits, or carry losses, despite these cost cuts and despite this consolidation. The profit margin in aviation is low enough that few other sectors could convince the markets of their worth at those levels. And still, this ineffective strategy persists.
On the other end of the spectrum, the growth of luxury carriers has led to a different knee-jerk reaction. Rather than consider how brand positioning, product design and service offerings could drive loyalty, airlines have relied on the frequent flyer program (once a silver bullet which airlines are now melting down to press for coins) and on little else. The rise of these higher-standard competitors is fought with politics, often based on weak and even embarrassing arguments.
“Airlines have limited time and resources, but the market around them is evolving faster than ever. This joint PAXEX360 offering enables key decision makers to very quickly understand both the big picture and the small details, and provides a platform for informally, yet concisely, identifying key strategic targets for improvement, with the long-term aim of increasing loyalty and yield,” say Baron and Kollau in a joint statement.
The years since deregulation have not been long enough for airlines to begin thinking of themselves as brands, just as other strong corporations around the world do. They need help. Passengers have in some ways contributed to this decline, by consistently making decisions based on fares, but when the sugar and the salt both clump anyway who wants to spend the extra pennies?
This decline has not just affected airlines. Its negative repercussions have trickled down to suppliers, leading to consolidation in that space which now interferes with the completion of critical programs. Baron and Kollau recognise this too.
“We are also tailoring PAXEX360 workshops for airline supplier partners. They have told us they are keen to improve their products and services to airlines, and face the same pressure on resources and exposure to various risks. Suppliers can greatly benefit from learning what the trends are and how they are influenced by general consumer trends. By gaining better understanding of the inner workings of airlines, they can also more efficiently allocate resources.”
The industry needs more projects like PAXEX360. Learning of its development is both encouraging and inspiring. There is no easy solution to the conundrum, but abundant intelligence in the industry could lead to improvements. Hopefully, more airlines will listen to experts, like Baron, Kollau and so many others in the field eager to make flying a pleasure for all—and profitable to boot.
Discussion of these matters, focused on many strategies to solve the dilemma, will take place in Hamburg this April at the Passenger Experience Conference–an invaluable part of the Aircraft Interiors Expo. Flight Chic will report on fresh ideas presented by experts there.
The peanuts have been nicely salted, even adding mint and honey to the mix. But they are evolving, some veering into the category which–Flight Chic readers will know–I insist on calling Low-Cost LUX. It’s time for traditional carriers to respond with just the right amount of quality sugar to make their recipe appealing and to keep customers coming back for more.
My own slice of advice to airlines: don’t chase the money, build strong brands and let the money chase you!