Customer Experience
Delta teams up with Westin Hotels for ‘Heavenly’ onboard amenities
By Raymond Kollau, airlinetrends.com
2 March 2013 | Delta Business Class customers will soon be able to have a more comfortable sleep as the airline has teamed up with Westin Hotels to create an in-flight version of Westin Hotel’s ‘Heavenly Bed’ pillows and comforters.
Dubbed ‘Westin Heavenly In-Flight Bedding’, the branded amenities will be available from June on for passengers on US transcontinental routes and between Atlanta and Hawaii. Passengers on flights longer than 12 hours also will receive a lumbar pillow. A few years ago, the hotel group had a similar agreement for a brief period with United Airlines on transcontinental routes in the U.S.
Says Joanne Smith, Delta’s SVP In Flight Service, “In recent surveys, customers have told us that the most important part of the in-flight experience is sleep. The new Westin Heavenly In-Flight bedding product is just one of the new amenities Delta is introducing to ensure customers achieve a restful, rejuvenating in-flight experience.”
The Delta x Westin tie-up is part of a series of investments in several other products and services to revamp the in-flight sleep experience. By the end of 2013, 70 percent of all Delta aircraft will have flat beds and by early 2014, Delta’s entire widebody fleet is scheduled to be complete.
To create a more restful cabin environment, flight attendants also are now proactively adjusting for appropriate lighting based on the time of day and streamlining cabin announcements to decrease noise disruptions. Delta has also introduced an ‘Express Meal’ service that features lighter fare and a one-step delivery process on all international flights departing after 9 p.m. and flights between JFK and London’s Heathrow Airport, and will add a so-called ‘white noise’ channel on its IFE system. Delta declined to say how much money it was putting into the new sleep strategy, describing it as a “substantial investment, in the hundreds of millions of dollars,” which would also cover the installation of flat-bed seats.
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Airports evolve from ‘spaces of flow’ to destinations that connect people and places
By Hildegard Assies, UrbanRetail
5 December 2012 | Between 2010 and 2015 the size of the global airport retailing market is forecast to expand by 44.5 percent from to nearly USD 40 billion. In a time when downtown retail is suffering, facing strong competition from internet and new challenges how to engage consumers, airports’ commercial income is substantially increasing and for example in Europe now accounts for an average 48 percent of total airport revenues.
In 50 years, the airport retailing market has gone through a major development. Since the opening of the first duty free store at Shannon Airport in Ireland (in the 1950s), retailing at airports has become a professionalized market that offers (luxury) brands a unique platform to engage with an international mix of customers. Add to this the growing understanding of airports of passengers needs and it becomes clear that today’s airports are no longer just a space of passenger flows, but are evolving into locations that offer a sense of place for consumers on the move (a.k.a. ‘transumers’).
A local touch in a high-traffic location
In order to create an unique sense of place, airports have realized they had to differentiate the passenger experience. Not only by designing seamless, efficient, processes and fancy terminals, but by creating a distinct ambiance with a unique and flexible portfolio of retail, food & beverage and service concepts.
Uniqueness is achieved by developing innovative concepts, preferable with a local flavour by featuring local brands and experiences, as well as global brands that offer a selection of local products (‘glocalization’).
Airlinetrends.com has reported before on ‘localization’ of airports, with great examples at Tokyo Haneda (Edo Market), Amsterdam Schiphol (Holland Boulevard) and Copenhagen Kastrup (Foodmarket). In the meantime new initiatives have evolved at for example ANA-Aeroportos de Portugal, which recently opened an upscale destination merchandise store named Portfolio at Lisbon Airport as part of its drive to create a strong ‘sense of place’ across its airport network.
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Long-haul low-cost carrier AirAsia X to offer kids-free ‘Quiet Zone’ onboard
By Raymond Kollau, airlinetrends.com
2 September 2012 | Two recent surveys conducted by TripAdvisor found that 40 percent of U.S. travellers said they would pay extra to sit in a designated quiet section of the plane, while nearly 80 percent of Britons agreed there should be child-free zones on board, and a third of of respondents would pay more for their flight if there were no children on board.
Quiet Zone
Following a controversial decision by Malaysia Airlines to introduce a ‘child-free cabin’ on the upper deck of its new A380 superjumbo (Business and Economy), Malaysia-based long-haul low-cost carrier AirAsia X has announced it will be launching a so-called ‘Quiet Zone’ on its fleet of Airbus A330s.
Starting in February 2013, the airline will create a “Quiet Zone” in the front section of its widebody aircraft, located between the airline’s Premium Class section and the front galley. Children younger than 12 years old will not be able to book seats in the Quiet Zone, and passengers opting for the zone will be asked to keep noise to a minimum, while there will also be special ambient lighting in the cabin. Passenger will also be among the first to disembark.
The dedicated zone will consist of the first eight rows of the Economy section (rows 7 to 14), and as the front area already houses the airline’s Premium Class, turning this part of the aircraft into a Quiet Zone will also be appreciated by AirAsia X’s premium passengers.
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Iberia provides ground staff and cabin crew with iPads to improve customer service
By Raymond Kollau, airlinetrends.com
23 July 2012 | Following recent initiatives by British Airways, KLM, and SWISS, Spanish flag carrier Iberia has just announced it will equip its 600 pursors with iPads in order to help cabin attendants anticipate passengers’ needs and offer a more personalised and higher quality service.
Iberia’s new crew iPad contains the entire passenger manifest, real-time graphic information about the status of embarkation and shows the seat assigned to each customer. The app also identifies members of the Iberia Plus loyalty programme and their membership level, as well as all special needs passengers, unaccompanied minors, those requiring special meals, etcetera. It also informs the pursers of each passenger’s recent flights with Iberia, including any incidents.
Iberia says the application will gradually incorporate additional data, such as descriptions and pictures of the meals available on the flight, and information of interest to passengers, covering hotels, restaurants, consulates, embassies, etcetera. Pursers can use their iPads to change seat assignment, and the device will also store duty manuals for crew members, formerly available only on paper. A video of Iberia’s new iPad-based onboard service is available here.
Iberia Ágora project
The introduction of the iPad for pursers is one of several initiatives that are part of Iberia’s Ágora program, which has been launched by the airline to improve customer service, punctuality, and operational efficiency. In early 2011, Iberia equipped customer service staff at its Madrid-Barajas hub with iPads that provide them with real-time access to operational information so they can make decisions and keep passengers informed in a better way. Tablet PCs are also used in the daily servicing of the ground handling vehicles used by Iberia at Madrid-Barajas.
IBHelp
While the IBPad initiative focused on providing Iberia ground staff with real-time information, the airline has also just launched a new initiative called ‘IBHelp’ as an extension of the IBPad-based customer service. More than 100 Iberia customer service agents will be equipped with iPads and PDAs loaded with applications enabling them to deal with a wide range of customer incidents and requests in real-time and from any location within the airport, making them more proactive and mobile. To implement IBHelp, Iberia has developed an check-in platform called ‘Departure Control System’ to link the mobile devices to all check-in kiosks and Quick Service Points from which documents may be printed. According to Iberia, in addition to making customer service more flexible and agile, the objective of IBHelp is to optimise customer service resources at peak times (video here).
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Emirates offers parents in transit free use of baby strollers at its Dubai hub
By Raymond Kollau, airlinetrends.com
18 July 2012 | Airlines from the Gulf Region tend to make an extra effort to accommodate passengers travelling with young children. Witness for example Gulf Air’s Sky Nannies who offer help with boarding and disembarkation and keep a watchful eye on children during the flight should parents doze off or just want to get engrossed in a book or a movie. A Sky Nanny is also present in Gulf Air’s lounge at Bahrein Airport. On a similar note, Etihad’s ‘Family Room’ at its Abu Dhabi hub, has nannies meet and greet families travelling with children at the lounge entrance before taking the kids to the family room, where they can play with toys, read books and watch television all under supervision of the nannies that have professional training in childcare and first aid.
Stroller service
Meanwhile in Dubai, Emirates – which sees the majority of its passengers transfer to another flight at its hub – for several years has been offering a complimentary baby stroller service for passengers arriving and transiting at Dubai International Airport.
The baby strollers are available to passengers on arrival at every Emirates gate at the airport. The colourful strollers, easily identifiable with their prominent Emirates branding, are manufactured by MacLaren and include a disposable hygiene seat cover. The baby strollers are placed in specially-marked cupboards located at arrival gates for passengers disembarking their Emirates flight so they can conveniently help themselves to a stroller. Emirates baggage staff are on hand to ensure these strollers (including twin versions) are available round-the-clock and that the cupboards are always stocked. For passengers ending their journey in Dubai, strollers can be returned at designated areas in the arrivals baggage hall and for passengers in transit, strollers can be deposited at their next departure gate.
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At airlinetrends.com we are continuously on the lookout for innovative products and services launched by airlines around the world as they respond to changing customer needs and industry developments. Once a year, we wrap up our findings and select 10 airlines from around the world that in our view have launched a wide range of innovative products and services in the past year – be it as part of a company culture of continuous innovation, a strategy to challenge the industry status quo, or as part of efforts to catch up after years of underinvestment.
The airlines on our innovative airlines ranking do not necessarily feature on the various ‘the world’s best airlines’ surveys. Instead, we aimed to select those airlines that have come up with interesting innovations that are an indication of the direction the airline passenger experience is heading in. Or in the words of sci-fi writer William Gibson: “The future is already here, it’s just unevenly distributed.”
Innovative Airlines 2012: #1 Korean Air
14 June 2012 | Korean Air tops airlinetrends.com’s 2012 ranking of the world’s most innovative airlines. The flag carrier of the ‘Land of the Morning Calm’ has established itself as a major hub carrier for passengers travelling between Asia and North America; its A380 flagships have the lowest seat density of any A380 operator and feature bars and lounges branded by Absolut Vodka, as well as a duty free showcase. The airline also operates its own organic farm and offers attentive service amenities such as a coat storage service and a women-only lounge at Seoul’s Incheon Airport, which itself has been voted best airport in the world for the past seven years.
Incheon hub
Sandwiched between the world’s second and third largest economies of China and Japan, Seoul’s Incheon Airport has become a key North East Asia hub, offering more direct flights to Japanese cities than even Tokyo Narita, which is Japan’s main international airport. Furthermore, Korean Air is taking advantage of South Korea’s open skies policies with the US, Canada and China to target travellers flying between East Asia and North America (where it serves 13 destinations). The airline’s short-haul route network spans 23 cities in China and 15 destinations in Japan and the airline generates 56 percent of its revenues on routes to China, Japan and North America.
Well-positioned
Because of high oil prices, a weak Korean won and the slow recovery of cargo traffic (Korean Air is the second largest cargo airline in the world after Cathay Pacific), Korean Air made a net loss in 2011. Analysts, however, are optimistic about the airline’s future prospects, noting that “it will benefit from a solid increase in inbound/transit passenger demand especially from Chinese tourists, and increasing exports of consumer electronics and automobile components.” Furthermore – similar to Delta Air Lines’ recent purchase of an oil refinery –Korean Air in 2007 bought a 28-percent stake in South Korean oil company S-Oil in order to secure a stable supply of jet fuel.
Additionally, while many airlines across Asia are currently busy establishing their own low-cost carriers (LCC’s), Korean Air in 2008 launched a low-cost subsidiary – Jin Air – in order to compete with Korea’s high-speed rail network, the growth of domestic budget air travel, and the entry of Chinese and Southeast Asian LCCs. As LCCs in South Korea today account for over 40 percent of passengers on domestic routes, Jin Air is rapidly expanding its international operations. The carrier was the first South Korean LCC to offer services to mainland China and has launched a raft of new international routes in recent months. As it spreads its wings across Asia, Jin Air will also benefit from having a first-mover advantage compared with the relative youth of Japanese LCC’s, while Korean Air may also use its LCC unit more strategically in the future.
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Innovative Airlines 2012: #2 British Airways
By Brian Pillsbury
12 June 2012 | For the past several years, there was a sense that if things could go wrong for British Airways (BA), they usually did: A global financial crisis set against BA’s high exposure to the premium business travel market which resulted in large losses. Endless merger talks with Iberia. Labor disputes that forced flight cancellations and fleet groundings. And who can forget the rocky debut of London Heathrow’s state-of-the-art Terminal 5 in 2008. With those difficult days largely behind it, BA appears to have regained its footing with several key innovative programs and plans now in motion.
GBP 5 billion investment
Announced in September 2011, British Airways’ five-year GBP 5 billion investment program encompasses several key areas of focus. Overall, it will see BA’s customers benefitting from new aircraft, updated World Traveller (economy) and World Traveller Plus (premium economy) cabins, a revamped First class, and an array of improvements to in-flight service, such as a more personal service and more flavoursome catering.
To Fly. To Serve.
Central to this effort is BA’s GBP 20 million branding campaign, which kicked off in September of last year. The ‘To Fly. To Serve.’ advertisement campaign has the goal of re-igniting passion and belief in the BA brand among its customers and staff. The ‘To Fly. To Serve’ motto itself is found on the BA coat of arms and on the uniforms of its crew members. The campaign is meant to reflect British Airways’ “long, storied history as genuine pioneers of commercial aviation from its earliest days to the modern era, and to evoke a trusted image of a distinctly British brand emphasizing quintessential British traits of quiet confidence, competence, professionalism, and devotion to service.“
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Innovative Airlines 2012: #3 Delta Air Lines
By Brian Pillsbury
8 June 2012 | Delta Air Lines has again earned a top 5 finish on our ranking of most innovative airlines, thanks to a number of ongoing and innovative investments that, in Delta’s words, have the aim of “building a better airline, not just a bigger one.” On the heels of its 2008 acquisition of Northwest, Delta’s consumer rankings suffered as passenger complaints increased. Airline mergers and their associated integration activities typically impact negatively customer satisfaction. However, Delta’s response to that in the form a USD 2 billion dollar investment program (which runs through 2013) put in place to improve the quality of its products and services deserve particular attention in our view.
Customer Service
As part of the multi-billion quality improvement program, Delta is focusing significant attention on the training of its customer-facing staff. The enhanced training programs and seminars are being targeted to the roughly 11,000 Delta passenger service agents and supervisors who are the day-to-day face of the airline to the travelling public. It has been over a decade since Delta undertook such a large-scale training effort, and the renewed focus on service standards comes in light of Delta’s poor customer satisfaction scores in industry surveys in recent years.
Responding to passenger feedback for a more personal touch on the ground, Delta has already revived its ‘Red Coats’ service agents. In their role as a ‘super’ passenger service agent, the Red Coats’ primary mission is to fix customer problems. Easy to spot in busy airports thanks to their trademark red blazers, the Delta Red Coats carry hand-held computers that allow them to handle an array of issues on the spot, such as helping customers make flight connections, issuing new boarding passes or providing food vouchers when necessary. Over 800 agents are currently deployed airside at airports across the US, as well as at Delta’s Asian hub at Tokyo Narita.
Expanding on its customer service footprint in the social networking space, Delta became the first airline to offer dedicated customer support via Facebook, as it brought the ‘Delta Assist’ Twitter service to the social network in March 2011, providing real-time travel assistance. To better serve its Spanish language customers, it also launched the @deltaassist_ES Twitter channel in the fall of 2011.
Innovative services
Delta was also the first airline to roll out mobile bag tracking capabilities via its Delta app for smartphones, allowing passengers to track their checked baggage in real-time. The airline also quietly introduced a premium service in partnership with the German automaker Porsche at its Atlanta hub for its highest-tier Diamond Medallion customers. Selected arriving passengers are escorted from the plane to a waiting Porsche luxury vehicle for a ride to their cars in the parking lot or another terminal for a connecting flight. Porsche has provided the vehicles to Delta free of charge, but has placed information about the car models in the vehicles and in Delta Sky Lounges at the airport.
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Innovative Airlines 2012: #4 KLM
6 June 2012 | In 4th place on our 2012 ranking of innovative airlines is KLM Royal Dutch Airlines. Part of Air France since 2004, the Dutch airline is the seventh largest airline in the world in terms of international kilometers flown, and serves 135 destinations with a fleet of 157 aircraft. Having a small homebase, KLM’s strength lies in a tightly-knit, worldwide network, as the majority of its 25 million passengers transfers through its Amsterdam Schiphol hub, which is widely regarded as one of the best airports in the world.
KLM has been an early adopter of self-service options such as DIY luggage check-in, has a strong focus on sustainability (e.g, catering, biofuel), is rapidly expanding in China, aims to differentiate the passenger experience by adding local Dutch touches, and is a frontrunner in the adoption of social media.
Dutch heritage
According to KLM, customers have indicated that they appreciate KLM’s typically Dutch character, and one of the ways the airline is emphasizing its Dutch origins is by partnering with contemporary Dutch designers Marcel Wanders and Viktor&Rolf for the creation of its onboard amenities. Marcel Wanders (of Droog Design fame) has designed the airline’s Business Class tableware on short- and long-haul flights in his signature style, while Viktor&Rolf have created the airline’s amenity kits.
KLM also recently teamed with Dutch designer Hella Jongerius – known for her industrial textile and colour skills – to revitalise its Business Class cabin interior across the fleet. The new Business Class will also feature BE Aerospace-produced ‘Diamond’ full-flat beds, which will replace the airline’s current angled lie-flat seats. KLM’s fleet of 22 B747-400s will be the first to be retrofitted with the new seats and further details of the design will be announced in the second half of 2012.
Delft Blue
Delft Blue porcelain is also part of KLM’s Dutch-inspired branding. Since the 1950s, the airline has handed out small ceramic replicas of historical Dutch houses filled with ‘genever’ (a Dutch style of gin) to passengers in Business Class, that are still a popular souvenir item for many passengers. Furthermore, last year KLM launched a ‘Tile & Inspire’ campaign which invited Facebook users to convert their profile picture into a Delft Blue tile and add their own message. 4,000 of the most inspiring tiles were placed on the body of a KLM ‘Delft Blue’ Boeing 777-200.
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Innovative Airlines 2012: #5 TAM
30 May 2012 | Established in 1976 as a regional carrier, TAM has quickly become the flag-carrying airline of Brazil after the demise of Varig in 2006. TAM is currently in the process of merging with LAN from Chile to create one of the largest airline groups worldwide, called LATAM Airlines Group. The merger between LAN and TAM is a response to the consolidation of the airline industry in the USA and Europe, as well as the rise of ‘Gulf Gullivers’ such as Emirates, who are increasing their presence in Latin America due to the region’s high growth perspective.
Based at São Paulo’s two overburdoned airports, Guarulhos International Airport and Congonhas (domestic flights), TAM carried 37.7 million passengers in 2011 and today flies to 42 destinations in Brazil and 19 destinations internationally, with a fleet of 156 aircraft. The airline has been growing rapidly in recent years, taking advantage of Brazil’s expanding middle class, many of whom are abandoning intercity buses and flying for the first time. In 2011, demand for domestic flights in Brazil increased by 16 percent and growth is expected to continue with 7 to 9 percent in 2012. TAM is also expected to benefit from the world cup soccer and the Olympic Games, which will be held in Brazil in respectively 2014 and 2016. Following a 22 percent revenue increase of its international operations in 2011, the airline will take delivery of 8 B777s during 2012 and 2013.
Besides its rapid expansion, TAM aims to differentiate itself with innovative products and services, such as offering passengers a 1970′s-style retro experience onboard or letting kids help distribute candies before the flight takes off. The airline has also been the first carrier in Latin America to introduce onboard connectivity, operate biofuel-powered flights and will unveil an entirely redesigned cabin interior in the second half of 2012.
Interior redesign
In 2009, TAM hired Priestmangoode to completely redesign the entire passenger experience for the airline – from cabin architecture, seats, galleys and lavatories to staff uniforms and in-flight service provisions, such as meals. Priestmangoode has also been responsible for the design of the graphic user interface (GUI) of the Panasonic IFE system, so the look and feel of the system would be an extension of the new cabin interior. The new interior will make its debut on TAM’s Boeing 777-300ERs which will be forthcoming from August 2012 onwards, and TAM’s existing fleet of narrow- and widebody aircraft will also be retrofitted with the new cabins.
Says Priestmangoode Director Luke Hawes: “Our work for TAM is crucial to their brand development, giving them the customer experience they need as they move up to become a major international carrier. Our experience of flying with TAM is that their service is exceptional. But their brand presentation currently just doesn’t match it. The designs we will roll out across their entire fleet will present them as an important international player and give them the tools they need to compete with the world’s other major international carriers.”
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Innovative Airlines 2012: #6 Qatar Airways
By Vivek Mayasandra, Take Flight Project
25 May 2012 | With the Gulf Region having firmly anchored itself as a global aviation crossroads, it comes with little surprise that Qatar Airways is on our list of airlines to watch in 2012. The national carrier of Qatar has experienced a rapid ascent to become one of the few ‘5-Star Airlines’ in the sky and was named “Airline of the Year 2011” by Skytrax – which cited its roomy Economy cabin and Business Class product – including the Premium Terminal at its Doha hub – as key drivers for the ranking.
Compared with Gulf-based competitors Emirates and Etihad, Qatar Airways takes a more low-key approach in designing its passenger experience. Says the airline’s CEO Akbar Al Baker in an emailed statement to airlinetrends.com, “We believe that our key innovation is not so much one particular product or service, but rather our commitment to blending the latest technologies, trends and styles with the best aspects of air travel as it used to be, including plenty of space, inspiring cuisine and a warm, personal service. We provide an experience, not sell a commodity.” Continues Al Baker, “Although our premium seats offer a high degree of comfort and privacy we do not see the need to feature gimmicks such as walls or doors in any of our designs.”
Onboard Experience
Qatar Airways’ fleet of widebody aircraft offer a Business Class product that features 180 degree flat bed seats in a 2-2-2 configuration, a seat pitch of 78 inches, 15 inch IFE screens (17”on its B777s) with over 1,000 entertainment options, and a-la-carte dining with all meals prepared at time of order. In Economy, the standard seat pitch is up to 34 inches (significantly more than on other airlines). Passengers also receive a complimentary toiletry pouch and the airline has teamed up with wellbeing guru Deepak Chopra to produce a ‘Tips to Fly Healthy’ guide that can be found in the seat-back pocket. All seats also offer in-seat power and a 10.6 inch IFE screen.
B787 Dreamliner
Qatar Airways expects delivery of its first Boeing 787 in Summer 2012 (it plans to have five 787s in service by the end of the year) and the airline will be the launch customer in the Middle East for the aircraft. Qatar will initially operate the 787 on intra-Gulf routes to provide flight crew with training hours before it will deploy the aircraft on the Doha–London Heathrow route in late August. Bloomberg reports that Qatar also plans to start flights to Atlanta, Chicago, Boston and Detroit within the next year as it begins receiving its 787s.
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Innovative Airlines 2012: #7 Virgin America
By Brian Pillsbury
21 May 2012 | Number 7 on our 2012 list of the world’s most innovative airlines is ‘no-frills chic’ carrier Virgin America. Easy to recognize thanks to its iconic cabin lighting and hip and forward-looking approach to airline travel, Virgin America has firmly established itself as a favoured choice among the urban, tech savvy flying demographic. The ‘un-official airline of Silicon Valley’ is also the only U.S. carrier to install power and USB outlets in all seats, and was the first U.S. airline to offer in-flight Wi-Fi on all aircraft in the fleet. True to its brand image, one of the aircraft in the fleet pays homage to the late Steve Jobs by painting his famous quote “Stay Hungry, Stay Foolish” on the side, while another aircraft is named #nerdbird, thanks to the large number of Wi-Fi users travelling on the San Francisco-Boston route.
Based out of San Francisco International Airport, Virgin America has expanded from its initial focus on domestic long-haul point to point service to now include intermediate routes as it adds more destinations in the US. It also now flies to three popular holiday destinations in Mexico. The privately-held airline (an IPO is planned in 2013) airline has strived to transform the standard domestic air travel experience from something that often is a ‘mass-produced’ purely functional experience into something much more evocative and stylish. Starting with the check-in areas at many Virgin America terminals (such as at LAX), one immediately notices the soft beat of club music and distinct lighting that set the tone for a unique travel experience.
Quality instead of size
Virgin America continued to drive significant growth in 2011, expanding its fleet from 34 A320s in January 2011 to 51 aircraft in May 2012. The airline has not turned in a profitable year since beginning operations in 2007 and experienced a net loss of USD30.8 million for the fourth quarter of 2011 in which revenues rose 45 percent to USD276.8 million.
Nevertheless, Virgin America has aggressive expansion plans in mind and is targeting a number of new destinations in key US metropolitan areas. According to the airline’s CEO, David Cush, Virgin America was designed to be an airline for business travelers and, as such, wants to be present in the primary and dominant US business markets. Cush cited the influence of frequent flyer programmes and corporate sales programs as being the two greatest hurdles for a growing company like Virgin, but stated that, despite a tight economy and stiff competition, he believes that Virgin will prosper because of its unique services and amenities.
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Innovative Airlines 2012: #8 airBaltic
18 May 2012 | Latvia-based airBaltic stands out as an airline whose innovations have been featured many times on airlinetrends.com. In recent years, the carrier has transformed from a point-to-point low-cost carrier into a hybrid LCC, turning its Riga ‘North Hub’ into a transit point for travellers between Northern Europe, Eastern Europe, Southern Europe and Central Asia. AirBaltic offers passengers connecting through Riga 25-minute connection times, while other ‘hybrid’ features of the airline include services that are staple of mainline carriers, such as a separate Business Class cabin, an airport lounge and a frequent flyer program. AirBaltic further boasts a cost per-average seat kilometer that is on par with the likes of Easyjet and Norwegian and 30 to 40 percent lower than Finnair and SAS.
Restructuring
AirBaltic has been growing its network quickly in recent years and currently serves over 60 destinations from Riga. The airline carried around 3.3 million passengers in 2011, compared with 1.4 million in 2006. However, airBaltic’s ambitious hub strategy (50 percent of passengers transits at Riga) has not yet materialized into a profitable operation for the airline. According to airBaltic’s new CEO Martin Gauss, 2011 losses hit more than EUR 85 million. In particular, airBaltic’s relatively older, fuel-inefficient fleet of B737-3/500s and Fokker 50s (the latter will be phased out at the end of 2012) are are a drain on the airline’s operational cost performance. Furthermore, the financial situation of the airline led to a public fight last year between airBaltic’s two shareholders, former CEO Bertolt Flick (who owned 47 percent of airBaltic) and the Latvian government (52 percent share) for control of the airline.
After a long-running saga, Flick resigned from the airline in October 2011 as part of an agreement to increase the company’s share capital by the Latvian government, which also used the bankruptcy of one of Latvia’s banks to take full control of the airline. AirBaltic’s new CEO, former Malev boss Martin Gauss, has just launched a restructuring plan, which will cut costs by reducing the number of aircraft and modernising the carrier’s fleet. AirBaltic will also move away from a stringent focus on transfer traffic over its ‘North Hub Riga’ to a more point-to-point approach. A delegation from Latvia has also recently visited the Gulf Region as part of an investor roadshow to present the airline to potential investors, which included Etihad and Qatar Airways. Other airlines rumoured to be interested in the airline are Turkish Airlines and Hainan Airlines from China.
Innovations
Despite all internal turmoil, airBaltic continues to churn out attention-grabbing innovations. Along with differentiating its Business Class by serving passengers a 3-course meal based on organic, seasonal products from local Latvian farmers, freshly brewed Nespresso coffee, and complimentary iPads onboard and in its Riga lounge, airBaltic has come up with a host of innovative ancillary products, creative marketing campaigns, and the airline is one of the first carriers to launch a ‘social seating’ service.
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Innovative Airlines 2012: #9 AirAsia
By Vivek Mayasandra, Take Flight Project
16 May 2012 | In 2001, when CEO Tony Fernandes bought AirAsia for a token MYR1 plus MYR40 million (USD 12.5mln) debt, it was a failing state-owned regional carrier with only two aircraft. In just a decade, the Kuala Lumpur-based low-cost carrier (LCC) has become a pan-Asian airline group serving over 75 destinations with a fleet of over 100 aircraft. In June 2011 the airline signed an USD 18bn deal with Airbus for the delivery of 200 A320s over 15 years. Besides owning a stake in its long-haul sister airline AirAsiaX, AirAsia has local subsidiaries in Thailand and Indonesia, joint ventures in the Philippines and Vietnam, while an agreement with All Nippon Airways will see AirAsia Japan take to the skies in August 2012.
One of AirAsia’s key advantages lies in being in the right place at the right time. The airline’s pace of growth – which has made it Asia’s largest LCC with a market capitalization of USD 3 billion – is underpinned by emerging regional Asian economies, whose average annual growth rates of around 7 percent are continually lifting millions more people every year to an economic level at which budget airline flights are affordable.
Positioning
AirAsia’s stated goal is to be “the lowest cost airline in every market they serve” and its rigorous focus on expenses saw the airline charging a fee for passengers who want to use check-in desks at airports. While this now only applies to domestic passengers, it’s just one example that has led AirAsia to operate with the world’s lowest unit costs (in terms of available seat kilometres), which are lower than both Southwest Airlines in the US – who invented the low-cost model – and Europe’s ultra low-cost carrier Ryanair.
In the air, AirAsia is a classic LCC that offers few additional frills. AirAsia’s fleet of more than 100 A320 aircraft all have 186 leather seats and passengers pay for checked bags, can reserve their seat for a fee and buy their food and beverages onboard. On the ground at its hub at Kuala Lumpur International Airport, however, AirAsia has added more hybrid features such as a ‘Fly-Thru’ transit service for connecting passengers with flight transfers of at least 90 minutes. In March 2011, the airline launched a ‘Red Carpet’ service at 8 airports, including Kuala Lumpur, Singapore and Jakarta, where for a fee of approximately USD35 passengers can make use of priority check-in, fast track through security, lounge access, as well as priority boarding and luggage arrival. Additionally, in 2011, AirAsia launched its own frequent flyer program and is also trialling one of the world’s first onboard immigration processes.
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