Posts Tagged ‘air travel’

Selling sexy Samui potatoes

January 27, 2010

My blogging cousin Steve has a nice theory, that there may be still a lot of money to be made selling potatoes. His argument is that targetting proven markets for products with a fresh take on quality or service (for example) may be much more promising than trying to convince prospective customers about a completely new value proposition.

I was thinking about this when I landed in Koh Samui earlier this week.  We have all got so used to airports being, at best, something we suffer on the way to our end destination.  I had given up thinking they could ever make me want to visit a particular locale.  Until now…

Check out these pics of the Samui airport:

Instead of the usual authoritarian and impersonal setting, here was a facility that felt like it was a spruced-up leftover from the Fantasy Island set.  From the cute tram/golf-cart/bus cross-breed transport from the plane to the terminal, to the Gilligan’s Island architecture, the invisible security, the fishtanks in the bathroom to the open-air set-up, it is a fantastic point of differentiation from so many other satisficing airports I’ve visiting.

Who runs it? The airline (Bangkok Airways) that has a stranglehold over the landing slots.  They can clearly see the positive effect it has on customer perceptions.

Let’s hope some others embrace such mundane potato selling.

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Aussie Cannibals Part One – Jetstar eats Qantas

October 21, 2009

My recent post regarding Starbucks’ potentially damaging shift into the packaged coffee market (see it here), has got me thinking about such issues more generally. In particular, I have been contemplating a couple of prominent Aussie examples.

The question is whether product or brand extensions, especially within the same (or very similar) market space might be more harmful than initially assumed.

Qantas Jetstar cannibalI’ll start with Qantas (our national airline), it created the separate Jetstar brand and business back in 2003 in response to low-cost domestic competitors. The split was a logical means to circumvent a whole range of legacy restrictions in terms of labour practices, existing assets etc., and the split brand was good insurance against any immediate damage to corporate contracts, price premiums etc.

What has got a bit more complex is the move to shift the brand into the international arena, namely Asia. Numerous traditional Qantas routes have been shaved back in terms of frequency, with the gaps filled by decidely low-frills Jetstar flights. It remains unclear how financially viable this move is, and how it places Qantas versus full-service rivals in the region.

While the wording stinks of snobbery, there is certainly some substance in this quote from an Age article:

”Qantas is destroying its brand name,” a former Qantas executive says. ”It is cross-subsidising Jetstar like you won’t believe.”… “The low-fare market is the blue-singlet boys – the fellas going up [to Asia] for the bucks party – and the silver hairs…It’s the newlyweds and the newly deads. It’s just a flying bus service making its money from ancillary services”

The issue with air travel is that the market segments are not quite as simple as they first appear. A given Qantas plane has a mix of passengers cross-subsidising each others’ seats. Removing first and business class passengers hurts the viability of economy class. Flying solely economy class routes (as with Jetstar) must be hurting Qantas economy business.

Just as importantly, contributing to the downgrading of the air travel experience may create an unbreachable chasm in buying behaviour. Qantas will pushed up against higher service, but price-competitive mainstream Asian and Middle Eastern airlines, with considerably lower scope to tap into any jingoistic local market preferences.

Put simply, cheapskate Aussies will fly Jetstar internationally (especially when given little choice first time round on some routes), while more service-seeking Australians may dawdle off to Emirates, Singapore etc.

Might this have been a short-term move than hurts Qantas in the medium-to-longer term?