APEX Insight: According to a panel at last month’s CAPA Asia Summit in Singapore, an airline’s brand values and the suitability of service matter more to Asian travelers than low-cost and full-service labels.
A discussion at last month’s CAPA Asia Summit took a turn when Keisuke Okada, senior executive advisor to the chairman at All Nippon Airways, proposed that low-cost and full-service carrier labels are meaningless to passengers in Asia. According to Okada, brand values and the suitability of airline service matter most to Asian travelers. “They choose based on their need,” said Okada. “Back in Japan, if you’re going to take your family on vacation, you will take Vanilla Air.” Low-cost carrier Vanilla Air appeals specifically to leisure travelers, offering various affordable fare tiers as well as unbundled extras like pre-order meals.
“[Asian passengers] choose [airlines] based on their need.” – Keisuke Okada, All Nippon Airways
Okada explained that, while flyers perceive budget brands as appropriate to a particular type of journey, for business travelers, an airline’s network, reliability and product offering become the priority. He also suggested that, as airlines pick larger aircraft to serve long-haul routes, they can take advantage of the extra space to offer something superior, like better seats and galleys which allow for richer in-flight menus. These product features serve to reinforce the quality of the airline brand and build loyalty.
The term network carrier is more appropriate than full-service carrier because the services offered by each airline vary based on competitive brand strategy, and the route network is an important differentiating brand asset for the customer, Okada explained. According to him, finding the right market niche and adhering to the brand values which fit that niche, while maintaining cost-efficient operations, is a formula for success. Brand niche also builds loyalty because it drives consumer decisions.
“In Asia … People value traveling in front of the curtain.” — Peter Bellew, Malaysia Airlines
Malaysia Airlines’ CEO Peter Bellew agrees that niche matters, suggesting that there is a uniquely resilient market in Asia for premium flyers. He contrasted this with the European market, where he believes is a consumer backlash against premium offerings. “There’s almost an inverted snobbery in Europe … You’ve got people who are multimillionaires where it’s almost a sign of good faith that they travel economy,” he said. “In Asia, it’s quite different. People value traveling in front of the curtain … They want to sit up front and they will always want to sit up front. I don’t see that changing in the next 15 or 20 years.”
Bellew also pointed out that, for many Asian passengers, traveling in business or first class is a job perk, since other employment benefits may not be comparable to those in European countries. Achieving frequent flyer status, therefore, becomes more important to Asian passengers, in addition to prestige. In Asian markets, product offering is a strong driver of brand perception and customer loyalty.