news & views

Loyalty?

Posted on the 11th of February 2010 by Christopher Goddard, Managing Director

Being in travel certainly has it’s challenges and certainly no more so than at the moment. 

Airlines are doing their best to talk the economy up spruiking that the “green shoots of recovery” have taken hold and that airfares need to “normalise”. This is somewhat true because, as we all know, the fares that were readily available last year were unsustainable and needed to increase. A slightly bitter pill to swallow is any increase, however I think we all understand that costs increase and therefore so does the cost of doing business. What vendors, and particularly airlines, must realise is that an increase in cost must be equally accompanied with an increase in service. They cannot simply rely on loyalty of a customer being their primary source of revenue as now days travellers and travel management companies are far more savvy.

Most major carriers are aware of this and are making the relevant investment to ensure their loyal customers remain loyal. Their nemesis however is the low fare carrier which is why you see the “big boys” launching low fare off shoots. Qantas has Jetstar, Singapore Airlines has Tiger Airways but the key factor here is to ensure the brands are kept completely separate. It is arguable that one of the above has been successful at this and one has not. For every successful low fare carrier eg: Ryanair or SouthWest there have been countless failures. Since 2003 there have been 74 failed low cost carriers and as such the path for greater profit return is paved with much trepidation.

Loyal customers will remain loyal because of one major principle. That is, they feel they are getting the service and product that they paid for. No longer can the frequent traveller be “man handled” and expected to return simply because of frequent flyer points. Companies in general now regard frequent flyer as a side benefit and do not calculate them in their business proposals. Value for money is key here. Provide the customer with what is promised, make the process as efficient as possible for the travel management company and loyalty will very closely follow and remain.

We all understand that “green shoots of recovery” mean an increase in fares, and to a point, they are expected. Make sure though Mr Airline CEO that you have the goods to back up the increase, otherwise, loyalty may be up to the highest bidder.