Upping the Low-Cost Game
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This story was originally published in March/April issue of APEX Experience magazine.
Inspired by the raging success of low-fare pioneers like Ryanair and easyJet, European budget airlines have launched in droves over past two decades, competing fiercely with each other for passengers and routes. The tiny continent is now home to more than 20 low-cost carriers (LCCs), with more starting up every year.
As if operating in a highly saturated and cost-competitive environment isn’t challenge enough for the budget carriers of Europe, modern-day passengers have had the audacity to begin speaking out about their wants, needs and rights. They’re fully prepared to voice frustrations publicly via social media and vote with their wallet – ditching one LCC for another without an ounce of remorse.
Clever low-cost airlines have seen the writing on the wall: Low fares are no longer enough. The time has come to up the ante, shake up the strategy and, above all, charm the passenger. So, as with elsewhere in the world, the LCCs of Europe have been looking to stand out by improving brand perception and transforming the passenger experience.
“Clever low-cost airlines have seen the writing on the wall.”
Even Michael O’Leary, Ryanair’s notoriously brash and uncompromising CEO, admitted in 2014 that the airline could probably have been more successful had he listened sooner to late Ryanair cofounder Tony Ryan, who’d always urged him to be nicer to passengers.
“I think the Always Getting Better program we’ve launched in the last 12 months and the significant improvements we’ve made in the customer experience – and the way the customers responded to that – would suggest that he was right,” O’Leary said.
EASYJET: REWARDING LOYALTY AND MAXIMIZING TOUCHPOINTS
With 241 aircraft flying 735 routes, easyJet is the UK’s largest airline and Europe’s second largest short-haul airline. In 2015, the airline celebrated 20 years of service, the delivery of its 250th Airbus aircraft, and the fact that it still offers one-way fares starting at £30 (US$43), just as it did back in 1995 (though, for sticklers or penny-pinchers, fares were a pound lower at £29 that year).
The airline constantly walks a line between keeping fares low and enhancing the passenger experience. “Although we have come a long way, easyJet remains true to the simple principles it was set up around – to make travel easy and affordable,” a spokesperson tells APEX Media. “Our goal is to be Europe’s preferred airline. That is not necessarily about being the biggest, but about truly being the preferred choice.”
EasyJet believes that the 2012 introduction of allocated seating (some for a light fee) has been the single-most popular improvement for flyers. To the chagrin of competitors, allocated seating didn’t hurt the airline’s lean turnaround times – and the option has attracted new customers, like business travelers, who the airline was aiming to lure.
Programs to nurture and recognize loyal passengers haven’t historically been part of the LCC game plan, but at easyJet, change is coming in this regard as well. Starting early this year, the airline will introduce a recognition scheme called Flight Club. Hundreds of thousands of the airline’s best customers are expected to qualify for Flight Club, and they stand to benefit from free flight changes, free name changes, low-price guarantees, special offers and a dedicated support team.
When it comes to passenger experience investments, few offer bigger potential gains than the optimization of digital platforms. “Given our [large] scale, small changes often make big differences. We’ve invested heavily in mobile, and our mobile app has been downloaded over 14.9 million times, with [app-driven] revenue over the last quarter growing more than 50 percent,” says the airline’s spokesperson. “Other projects range from launching a passport scanner on our mobile app to launching automated bag-drop machines at Gatwick Airport and increased personalization across all touchpoints, building on the data we have about customers.”
In November 2015, easyJet snagged headlines by becoming the first airline to incorporate Flightradar24’s popular flight tracking software into its mobile app. Mobile Host, another new app feature (and joint initiative with Gatwick Airport), pushes check-in reminders, airport navigation tools and real-time gate and baggage belt notifications directly to passengers’ phones at the airline’s main hub.
NORWEGIAN AIR: IN IT FOR THE LONG HAUL
In May 2013, Norwegian began long-haul operations from Oslo and Stockholm to New York and Bangkok, making it an official competitor in both the short-haul and long-haul low-cost market – two very different beasts. Today, the airline operates 96 Boeing 737 aircraft in and around Europe and Scandinavia, plus eight 787 Dreamliners, which service 29 nonstop routes from US to London and Scandinavia, and six routes from the US to the Caribbean.
Some might suggest that, with its bold network expansions and in-flight perks (such as cabin mood lighting, embedded in-flight entertainment [IFE], live TV and Panasonic connectivity), Norwegian has established a brisk competitive pace for the European low-cost market, especially with regard to in-flight entertainment and connectivity offerings. Thomas Ramdahl, Norwegian’s chief commercial officer, would tend to agree – he’s ready for the competition to come a-knocking.
“Our unique low-cost long-haul service has forced other airlines to up their game,” says Ramdahl. “We are already seeing other low-cost carriers look to follow in our footsteps by starting their own long-haul services, while other full-service carriers are looking again at their flights to long-haul destinations that Norwegian now serves.”
Back in 2009, Norwegian became the first European carrier to select Row 44 (now Global Eagle Entertainment) Ku-band connectivity for passenger use, signing a deal to outfit its existing B737 fleet as well as future B737 deliveries. Last November, free live TV service was rolled out across most of the 737s serving Europe.
“We will continue to look at new ways to offer innovative digital solutions to our passengers.” – Thomas Ramdahl, Norwegian Air
“Norwegian has always recognized the importance of digital services, from booking a flight through to the travel experience itself. Our website and mobile app have recently been updated with new services to make it even easier for passengers to book and manage their travel,” says Ramdahl. “We will continue to look at new ways to offer innovative digital solutions to our passengers.”
According to the airline, Norwegian’s strategic approach has always been less about “no frills” and more about giving passengers choice. For those who want to travel with extra baggage, enjoy meals or snacks onboard, fast-track through security or access lounges, affordable options are there.
“However, many passengers just want a quick and efficient flight, so they shouldn’t have to pay for extras that they don’t want or need,” adds Ramdahl. “Our flexible approach (a range of five different fares, from basic to all-singing/all-dancing) allows passengers to only pay for what they want, giving them greater choice at less cost.”
MONARCH: LOW-COST MODEL TO THE RESCUE
Monarch Airlines, formed in 1968, is a UK carrier based at London Luton Airport. In the summer of 2014, it became evident that the complex model of charter flights, scheduled flights and package holidays the airline offered was not enabling the group to deliver the customer experience or profit expected.
A project to restructure the group was completed in October 2014, allowing Monarch to focus on its core destinations in the Canaries and the Mediterranean, while developing a more sustainable year-round scheduled flying program and a more consistent travel experience.
The airline was shedding its skin and emerging as yet another Europe LCC – and in spite of stiff regional competition, this proved to be the right move. In June of last year, the airline announced it had reduced winter losses by £40 M (US$57.88 M), and at its 2015 fiscal year-end (October), the group announced a return to profit.
Monarch has since worked hard to win hearts and minds through improved on-time performance and increased flight frequency, diligent feedback collection, enhanced digital services and through more traditional hard and soft product revamps.
“Our social channels have always been about customer-centricity,” says Ian Chambers, Monarch’s head of digital and marketing. “We use these platforms to listen, engage, promote, announce and resolve – at the heart of it is our social customer service process, allowing us to pick up customers’ questions or queries, engage with the customer and resolve their issues. Social [media] has to be credible and honest. It’s not just about posting advertising messages.”
Monarch is the only airline to collect and display a live customer rating. “We use Feefo customer ratings as a core proofing part of all advertising,” Chambers adds. Based on over 400,000 reviews, the airline’s earned bragging rights for its current rating of 4.5 (out of five) stars.
In other good news for passengers, Monarch recently introduced a free media bundle on its MPlayer IFE system that streams to passenger devices, giving customers a selection of free content in addition to paid content bundles purchased in flight. In February, the carrier brought in an enhanced range of buy-on-board food items called “From The Kitchen,” and through the winter, 11 aircraft were refurbished with a deep clean and new seating, carpets and curtains.