As usual, there was great discussion at the Phoenix Aviation Symposium last week, but one in particular grabbed me. Steven Kavanagh, Chief Commercial Officer for Aer Lingus in Ireland has an interesting way of looking at his airline. He wants to be “an expert at producing seats” and then make that a platform for others to peddle their wares. It’s a view that certainly isn’t shared industry-wide, but for an airline in Aer Lingus’s position, it probably makes sense.
This piece of the discussion came up during a back and forth about inflight internet. Steven argued that airlines shouldn’t have to pay to install internet at all and that the internet company should take all the risk. In his mind, Aer Lingus has a captive audience of people on the airplane and other companies, like internet providers, should pay a price to be able to have access to those people. So internet would be installed at the provider’s expense and in addition, a small royalty would be given to the airline for each sale. The bulk of the revenue goes to the internet provider.
You could repeat this with all kinds of products and services. Meals? Sure. Inflight shopping? Why not? Entertainment options? Yep. It’s an interesting way of looking at what an airline does. I imagine the view is colored by the fact that Aer Lingus has tremendous competition from Ryanair on nearly all its short haul routes. It’s tough to compete with those guys, but this kind of model lends itself well to that effort.
Of course, this biggest issue here is one of branding consistency. If you use this model, you’re going to be offering all different kinds of brands on top of your brand and the message can be muddled. That might not be an issue for Aer Lingus or other carriers where brand isn’t considered that important. After all, people make choices based primarily on schedule and price, right? So if Aer Lingus has a good fare at the right time (and it runs an on time airline), then it may think it’s got the idea right.
Others, however, disagree. Take a look at Southwest, for example. Gogo inflight internet has a model that’s somewhat similar to what Steven suggests. That company handles the pricing and takes on some of the risk. They also brand the service as Gogo. Southwest hates that idea, and that’s one of the main reasons it opted to go with a different provider, Row 44. It wanted to control the experience and have it branded as Southwest. Southwest wants to own the entire customer experience; the opposite of what Aer Lingus proposes.
Part of that may be that Southwest has one of the better brands out there (despite the recent problem of holes in 737s), so it wants to cultivate it and protect it. Opening the airline up to look similar to an app store for your mobile phone doesn’t work for that purpose.
But even those airlines that like this model only like it when it benefits them. Let’s say, for example, that Expedia pitches itself as a provider of travelers who want to book tickets and that if you want access to those travelers, you have to pay for placement. This is exactly the opposite of what American has suggested should happen. American has said that maybe Expedia and others should pay for the privilege of having their information available for the customers. It’s the opposite argument. Something tells me that we’ll only hear this argument when it means airlines don’t have to spend money.
In the end, this strategy isn’t right or wrong in general. It’s an airline-specific thing. And for Aer Lingus, which competes hard with low fare airline Ryanair, it probably makes sense. But it does come at the expense of the brand.