Home' Asian Aviation : AAV October 2010 Contents Advertorial
Will we ever have to pay for an Oshibori on a flight in Asia?
There are few things as
well preserved as the brand
identity and service quality
of Asia's leading airlines.
Asian carriers have a
worldwide reputation for
delivering a pleasant flight
experience as a result of a
model. From the moment
you board the plane you are
greeted with those extra touches that make air travel more tolerable for the
frequent business flyer and downright enjoyable for the leisure passenger. The
Oshibori (hot towel) to refresh your hands and face, the signature cocktail to
sip during your in-flight movie and the complimentary pillow to rest your head -
all of these elements add up to represent good value for the customer of an
Asian airline. But in other parts of the world, these services no longer come for
free. So why is it that Asian carriers have resisted the urge to put a price tag on
that hot towel?
A Lonely Planet article recently listed the world's best airlines for comfort and
customer service, and it was no great surprise that five out of the six airlines
mentioned were from the Asian region -- Singapore Airlines, Asiana Airlines,
Cathay Pacific, Malaysian Airlines, and Kingfisher Airlines, with Qatar Airways
rounding out the list1. The difference in service quality may be particularly
noticeable now, at the tail end of the downturn that led many airlines in the
United States and Europe to look for any possible avenue to boost revenues,
including cut backs on in-flight services.
Most airlines in America and Europe have made concerted efforts to monetise
the booking process, by both breaking down the original ticket price and
creating new differentiated services that they can charge for. These 'Ancillary
Services', as they are referred to in the industry, encourage travellers to part
with more cash for optional extras in addition to a base fee for their seat. For
some American airlines, selling you additional baggage allowance, lounge
access and even meals on-board, before you board, is the new normal.
Amadeus and IdeaWorks study found that airline ancillary revenues worldwide
increased by 43 percent in 2009, compared to 2008 earnings2.
Technology has been the enabler of this movement -- allowing airlines to
unbundle their services for individual sale, first on their websites and now also
via travel agencies. It is technology that is affording airlines and their passen-
gers more choice in terms of what is considered an essential element in the
travel experience and what can be sold separately.
For Asian airlines, the move to unbundle the traditional ticket offering and
charge for these ancillary services has been much slower. Only recently did
Singapore Airlines begin selling 'preferred seating' on flights, offering passen-
gers the chance to grab an exit row or extra legroom seat for a fee. Why have
Asian airlines been slower to adopt this business model? It's not because
they're sluggish to market effectively or create a compelling brand, that's for sure.
The reality is, Asian airlines are reluctant to compromise on their service ethos
in order to make some quick cash, recognising that it is the overall travel
experience and perception of value that drives customer loyalty.
Today's global traveler is no doubt financially focused, but also highly educated
and aspires to a higher standard of living and therefore a higher standard of
travel. There is a lot of emotional seduction in flying, for example, Singapore
Airlines from New York direct to Singapore, compared to flying United Airlines
via Hong Kong. It's the passion for the Orient, wrapped up in thousands of
years of service culture.
But that doesn't mean that ancillary services are a dead-end for Asian carriers.
Rather, they are exploring ways to position them as a discrete value-add,
rather than an obvious up-sell. Asian airlines have an opportunity to benefit
from ancillary services by using them as a means to deliver 'premium services'
rather than 'broken down pricing'. You could imagine in time a 'premium
baggage service' in operation, where loyal customers could apply online and
pay for expedited bags, or a 'premium meal package', which allows passenger
to pay extra for a superior food and beverage offering.
It's the tell-not-sell approach that could enable Asian carriers to bring more
ancillary revenue in to their business without threatening the very core brand
promise -- built around service differentiation and quality. Doing so correctly
and using the right tools (much like Amadeus's own Airline Ancillary Services
suite) could help boost the bottom line while actually increasing the airlines'
brand equity and enhancing consumer loyalty. Amadeus' airline partners are
looking for technology that gives them the flexibility to adapt
their business model in line with changing industry
standards and passenger preferences, whether that
evolution happens gradually or at full-speed ahead.
It seems unlikely that passengers in Asia will ever be
faced with the same degree of 'a la carte' travel that
is being introduced in the United States or Europe.
Of course we never know what the future will hold
in the long term, but for now Asian carriers
hold their brands in high esteem and
continue to offer a service
experience that includes the little
extras their customers' value and
have come to expect -
including that familiar Oshibori.
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