BUSINESS AVIATION

Airline Marketing: Evolving Through COVID-19 Impact & Rebuilding Future

Anusree Bhattacharya | August 31, 2021

The unprecedented wave of Covid 19 created significant turbulence in the aviation industry that made the industry face daunting new challenges. However, as airlines continue to respond to the challenges, the marketers remain focused on paving the way for quick recovery.

Whereas, aviation experts admitted that this black swan event impacted the airline industry roughly. The impact of COVID-19 on airlines was forced to face bankruptcy, destruction of financial packages, and complete changes in the airline industry in terms of security. Therefore, while keeping the fact that COVID-19 will have longer-term repercussions, it’s imperative the airline industry would quickly reduce the impact on its stakeholders and operations. And for this, airlines need to go beyond conventional thinking and come forward in using technology to dig in for the long haul.


Airline Industry: Riddled with Challenges Amid COVID-19

Given the airline market behavior during the Covid-19 crisis, it has many opportunities to target different marketing segments through direct and indirect channels. However, some complexities that challenged building an effective marketing strategy were:


Drop-in Revenues

According to KPMG, commercial revenue has been a rich source of income in airline businesses; it contributed more than 50% of inclusive revenues in the airline industry. However, a large share of revenue is generated by marketing which has completely dried up with minimum footfalls. Reduced economic growth, absence of remote work arrangements, and loss of operational models have been some of the fallen parts of the airline industry to deal with this new reality.

IATA, at first, stated that airline revenues could fall by $314 billion in 2020 owing to COVID-19, which is a fall of 55% compared to 2019. However, further analysis revealed that it fell $419 billion more in the same year. Also, the second quarter of 2020 saw a nearby decline to $43.5 billion in revenues compared to the projected baseline, a reduction of more than 1%.


Impact on Future Investments

The impact of COVID-19 on airlines was much on the plan for future investments and asset building. These areas posed significant challenges for airline businesses and investors to monetize assets or repurpose them to create shareholder value. In other ways, competition from newer asset-light businesses also posed an additional challenge on asset building and profitability.


How has Airline Industry Retorted to the Pandemic?

Most businesses have reduced all new investments, freezing shares, maintenance, and partnership costs. These have been the extreme response expected in the war—COVID-19, which is even gimmer than war.

But, despite all the impact of COVID-19 on airlines, airlines have responded with alacrity. The crisis made them stand by quickly developing new business processes and operations, research models. In a longer time, changes in the airline industry weren’t so significant. Airlines are also witnessing a radical shift in their development priorities and unique opportunities to conduct research. The desire to provide additional pressure on revenue management systems to predict demand more accurately has also been the core force of development. Let’s understand more under the following points:


Technology Makeover

In a progressively evolving digital-only landscape, the technology carries more value if used well. Investing in the right tools and technology can help monetize assets better and significantly improve operating efficiency and customer experience.


Refocus on Cost-line

Innovations in marketing strategies, technology can suggestively change the cost of providing services for both airlines and airports. It can help give more pressure on both affordability and profitability. This area of transformation can stimulate significant savings in operating costs and could become the norm for the best performance of marketing.


Innovate

COVID-19 has spawned the best inventions and innovations. The value of data and technology that you have access to today cannot be overstated. Yet, the aviation industry has shown the resilience to come back stronger and smarter. Therefore, there is a necessity for a thoughtful, analytical, and consistent approach to reforms to help the industry function at a newer and higher altitude and redefine its new normal. The changing geopolitical marketing scenario and impending operational shifts globally demand a swift and nimble approach. Advantageous changes in airline industrial policy in COVID-19 will be required to feat the opportunity, with accrete marketing strategic gains and create a better future.

In a nutshell, airlines had to reinvent how they looked at bookings, employee management, and revenue management, as the previous curves were no longer relevant, and the training data used for machine learning algorithms were no longer valid. Now, airline businesses are exploring novel ways to shorten the old methods used in forecasting, pick up on trends more quickly, and incorporate demand adjustments made by manual revenue management users.

Finally, the writing is evident on the wall—as airline stocks continue to falter (by 16 to 20%), the industry needs to go beyond conventional thinking and use technology to dig in for the long haul.


Airline Marketing: Path to Recovery with 3 Important Tech-Strategies

Inclusion of Advanced Analytics

In the next five years, airline businesses will proceed to develop their ability to install advanced analytics. Although the industry has been using advanced data and analytics, there are expectations that marketing leaders will expand the entire value chain of analytics more progressively. Data-backed analytics will render insights to pinpoint geo-specific interventions for maximum ROI.

While traditional sources of competitive advantage for airlines such as products, networks, technology will continue to gain importance, it is believed that increased usage of data science and advanced analytics will help the industry to augment these sources to deliver notable performance improvement.


Rapid Adoption of Data Science

The aviation industry is part of the change, too, in terms of technology development. Airline Technologies in Covid is radically varying the way businesses connect with their customers. The data required is allowing businesses to take informed steps towards operational efficiency. While embracing new technologies, changes in the airline industry are witnessing the addition of artificial intelligence (AI) to the maximum so that businesses can operate in the post-COVID-19 scenario.


Control of Digital Solutions

As airline market behavior during the Covid-19 crisis has incurred changes in the airline industry, the control of digital solutions has come to the rescue. The solutions are in need to shift resources and efficiently scale to maintain operations. Digital tools can help with a wide range of business efficiency, sales and revenue management, marketing, and network planning.


Opportunities to Reimagine in Post COVID-19 Era

Here are the significant ways in which it could be done.


Operating Model

Airlines today need a data-driven operating model with a mindset that pushes accountability across each touchpoint in the business journey. Marketing teams should be organized around journey stages keeping technological aspects on board. The operating model should be accompanied by KPIs that should be measured across the customer journey and regularly shared with every team member.


Digital Transformation

The airline industry could consider stepping up IT, digital, and automation investment now. The crucial strategies for digital transformation are driving data-driven platforms and personalization. Tracking business interaction at every touchpoint with the brands and their products enables better predictive analytics. This means integrating digital solutions with enterprise systems and making the data available at the point-of-sale for sales associates to view, interpret and recommend products accordingly will enhance the convenience of operations. In the case of point, airlines businesses can respond to the faster recovery of short-haul flights by investing in direct sales, owning the customer relationship.

Also, relationships with IT and its providers could be re-considered and explore from a technologically perspective. Beyond this, other initiatives which involve efforts like using data in smarter ways to enhance decision making, requiring some investment to yield significant payoffs, are in the line of digital investments.


Virtual Reality

Gone are the days with COVID-19, when customers were physically involved in the airline business and running it successfully. Unfortunately, the panic of the pandemic is here to stay as a part of our life. So, companies will need to think out of the box. Several tools are available in the market today to avoid physical interactions. Brands have introduced their own ‘Virtual test and try’ tools for marketing and sales purposes.

For instance, Guerlain invested in gamification and launched a mobile game called ‘WeChat’ to promote its sales deck. Similarly, to enhance the operational desk, Lancôme introduced ‘Virtual Mirror’ - an augmented reality virtual makeover app.12 ‘Modiface’- a Canadian AR and AI company, was purchased. Its product performs virtual try-on simulations and is enabled to support live video for all airline operations.

So, the crisis and issues the airline industry facing in the Covid‑19 on revenue generation will still be intensely felt in 2021-2022, as it was earlier. But it is expected that the coming quarter of 2021 will show improvements compared to the previous. This means the industry, which was moving from a decline of 7% in the first quarter of 2021, will see a decline of 35.2% in the fourth quarter compared to the projected baseline.


How to Plan a Marketing Strategy for your Airline Company?

Being in the market already, you can understand where the roots of a marketing campaign come from. Nearly all the airline businesses arise their marketing activities from their vital target group or according to the demand to promote a new product.

There is no solitary way to create a marketing campaign because it involves many company-specific details. Here, you will need to understand how you can stay ahead of your competitors in the marketing field to yield revenue.

Here is a brief sum-up of some valuable points that can help you.
  • Stick with your Customer Segment: Business or corporate travelers differ in their travel behavior and priorities. So, while you run a marketing campaign, it should highlight this factor as a prime concern.
  • Focus on the Product you will Market: This point covers that you need to consider that all the product dimensions (digital, physical, service) to market should consider on parameters like how do you want it to market, what are your secondary aims, and how can you benefit from customer actions.
  • Foster Interaction: So, try to keep as much interaction with your customers as possible. It does help to build loyalty, establish relations with your brand, and source valuable data about your customers. By doing this, you will be able to create a personalized experience for them in the future.
  • Be loyal: As long as you are not an ultra-low-cost airline operator, you will perhaps have to reward the loyalty your frequent customers give you. Special offers, discounts, and loyalty programs make your brand a company to stick with forever.
  • Keep an Eye on Competitors: As the airline market has high competition and competitors, your team creating a marketing strategy must include two key elements: your market position and your competitors.
  • And the last, you must maintain a balance between competition and customer loyalty at any cost.


Frequently Asked Questions


What are the top three issues the airline industry is facing in the Covid‑19?

  • Although the airline industry faced several challenges, the worse challenges were:
  • Sluggishness in travel/travel bans
  • Loss of revenue
  • Data loss


Which airlines have been most affected by coronavirus?

  • The list of airlines worst affected by covid-19 goes as:
  • China Southern
  • Hainan Airlines
  • Singapore airlines
  • Japan airlines
  • Korean Air & Asiana
  • Middle Asia
  • British Airways
  • United Airlines


What is the future of the aviation industry after covid-19?

From the perspective of the COVID-19 scenario, the aviation industry needs to pick itself up and begin rebuilding. From hygiene and health standards to aircraft data management to monitor an aircraft’s components and onboard equipment can transform airline operations.

Spotlight

Schiphol

Schiphol Group is an airport company, with Amsterdam Airport Schiphol as its main airport. Schiphol is Europe's fourth-largest airport in terms of passenger numbers, and third-largest in terms of cargo volumes. The mission of Schiphol Group is to connect the Netherlands with all of the world's major economic, political and cultural centres.

OTHER ARTICLES

What 2019 Taught Us About the U.S. Airline Industry

Article | February 18, 2020

For U.S. airlines, the fourth earnings season is now complete. And as is customary these days, all players produced solid profits. Collectively, Delta, American, United, Southwest, Alaska, JetBlue, Hawaiian, Spirit, and Allegiant reached a double-digit operating margin, topping 10 percent on nearly $46 billion in revenues. For all of 2019, they earned 11 percent on $184 billion. The year before: 10 percent on $175 billion. No other country has an airline industry so stable and profitable. What were the highlights of the final quarter of the final year of the decade? Here’s a review:

Read More

What’s Interesting About 2019’s Busiest International Routes?

Article | February 17, 2020

Have you ever thought about which routes around the world see the most traffic? What would your guesses be? Every year, the organization OAG (Official Airline Guide) puts out a publication detailing the world’s busiest routes. Their 2019 report had some interesting findings. Here’s what it revealed.

Read More

Why The Airbus A220 Is The Plane Of The Future

Article | February 11, 2020

The Airbus A220 isn’t really a new aircraft. Bombardier first flew the CSeries in September 2013, with its entry into service in July 2016. And yet, the A220 seems to be answering problems that we’re not quite having yet. Airbus predicts a need for 7,000 A220s over the next two decades, and that’s probably not too overoptimistic. Here’s how the A220 is the plane of the future, today. The landscape of aviation is changing. In the past, airlines operated on hub and spoke models, passengers were happy to fit around schedules and the price of jet fuel was so low that efficiency wasn’t a huge consideration. Clearly, aviation today is very different.

Read More

Why Does Aegean Want To Buy Croatia Airlines?

Article | February 10, 2020

Croatia Airlines is on sale, and Aegean Airlines expressed an interest to buy it. Why did the Greek flag carrier do this, and what plans could it have for Croatia Airlines? For several years now, the government of Croatia has been trying to sell Croatia Airlines. The national airline is loss-making and has not launched a single new route in 2019.

Read More

Spotlight

Schiphol

Schiphol Group is an airport company, with Amsterdam Airport Schiphol as its main airport. Schiphol is Europe's fourth-largest airport in terms of passenger numbers, and third-largest in terms of cargo volumes. The mission of Schiphol Group is to connect the Netherlands with all of the world's major economic, political and cultural centres.

Events