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Should Weak Carriers Adopt Stronger Ones' Brands?

Mon Feb 25, 2002 3:30 am

In spite of the brands-are-bad counterculture movement, led by New Left disciples of Naomi Klein and her book 'No Logo', the fact remains that branding is one of the most powerful market tools around. A very familiar brand is more likely to be purchased than a somewhat familiar one, and a somewhat or very unfamiliar brand is least likely of all to be purchased.

Some brands are so powerful that people can draw an association between the name and a slogan or image: American and its legendary 'Something Special in the Air'; British Airways and 'The World's Favourite Airline'; Qantas and its kangaroo; Singapore Airlines and its 'Singapore girls' in its magazine ads.

Other brands aren't so strong: Olympic is obviously associated with Greece, but is otherwise an obscure brand. TAP Air Portugal is only strong in Portugal itself and presumably among Portugese expatriates elsewhere. In Latin America, standalone brands like Avianca lack the market power of the U.S. carriers and face pressure from evolving multinational brands like LAN and TACA.

Should some of the weaker airlines around the world -- the more obscure ones that many people are only dimly aware of -- drop their brand names and become franchises for strong brands? The existing companies would remain owner-operators of their own aircraft, but would adopt another company's service standards, brand-name, scheduling and reservation systems, marketing initiatives, frequent-flyer programs and so on.

Could this even become a new revenue source for strong brand names -- selling their name and market power to smaller carriers, without the risk of investing in new aircraft or taking an ownership stake?
 
keesje
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Joined: Thu Apr 12, 2001 2:08 am

RE: Should Weak Carriers Adopt Stronger Ones' Brands?

Mon Feb 25, 2002 3:44 am

This is a interresting difficult topic.

A strong brand has proven to be revenue generating and increasing acceptance by potential passengers.

However imagine that the big UAL or AA didn´t have a single brand but 3-4 (for the public) seperate brands for different markets / target groups. Perhaps they would be glad now .....

I think what you see happening now with global airline brands such as STAR and Oneworld can be viewed as a compromise. E.g. NWA/KLM and its affiliates have not decided for a alliance brand yet although they they are the most integrated alliance.

Rebranding of several airlines together is of course a extremely expensive exercise. Airlines I think want to be shore of hard cash advandtages before they go for a common brand. Specially the old Airline brands could lose a loyal market segment.

cheers

keesje
"Never mistake motion for action." Ernest Hemingway
 
clipper471
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RE: Should Weak Carriers Adopt Stronger Ones' Brands?

Mon Feb 25, 2002 3:56 am

It's already done on a smaller scale: various regional carriers operate as American Eagle, United Express, Delta Connection, Northwest Airlink, Continental Express, etc.
 
iaflyer
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RE: Should Weak Carriers Adopt Stronger Ones' Brands?

Mon Feb 25, 2002 3:58 am

It's an interesting idea - but I think the code share alliances are basically doing the same thing. You can buy a ticket on Northwest, but actually be on a KLM airplane. Or vice-versa.

Most people who buy a ticket on NWA (that end up on a KLM airplane) don't know this until they show up at the airport. Of course, it's on the reservation and should be mentioned by the res agent when booking the ticket, but still. I'd bet it's a surprise when they get on a KLM airplane.

So, in effect, they are buying the Northwest brand name, but Northwest has sold it to KLM to help fill the airplane.

One problem is that a company has to be careful not to sell the brand name to someone who won't keep the "standards" (as they are in the airline industry) up. When people buy a ticket on airline A, they are expecting a certain standard of service (cabin service, checkin, FF mileage, and safety) even if they travel on airline B.

If I remember right, Delta was being sued as part of the SwissAir accident, because some of the passengers had bought tickets on a Delta flight. It was a code-share flight, but their contract for carriage was with Delta, not Swissair. Thus, Delta has some liability (how much - that's for the courts).

Alex
 
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RE: Should Weak Carriers Adopt Stronger Ones' Brands?

Mon Feb 25, 2002 10:38 pm

Iaflyer wrote: One problem is that a company has to be careful not to sell the brand name to someone who won't keep the "standards"

That's a good point. Any sort of franchising agreement would have to include measures for quality control. This would probably follow a model similar to the fast food and coffee shop industry, where many outlets are locally owned and operated, but subject to scruitiny by a district manager and head office.

Perhaps BA, which has some of its Mediterranean and South African routes operated by franchisees, has already set up a model which could be used by other companies.

When it comes to safety, a franchise could do more to promote safety in countries with dodgy records than a mere code-share would. It's one thing for a company to quietly lose code-sharing agreements because of safety concerns, as a couple of Asian carriers have done. It's another to lose an entire brand identity, or to have little chance of getting one until things are up to par.

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