How can airlines get consumers flying again?

North America's airline industry was already feeling the pinch of a sluggish economy when the Sept. 11 tragedy savagely hastened its decline.
Now Canada 3000 is bankrupt. At press time, beleaguered Air Canada is offering Canadians a chance to visit New York for $179 return over the Nov. 30 to Dec. 2 weekend, part of a new 'Canada Loves NY' campaign, created by Toronto agency Wolf Group. Meanwhile, the feds are sinking $20 million into a marketing campaign aimed at encouraging travel in Canada. Still, the American Airlines crash on Nov. 12 in Queens, N.Y., has likely rekindled consumer concerns about airline safety. Is it possible for Air Canada to fill their planes and survive without government subsidies?

CounterStrategy is a new feature that asks industry thinkers to put their creative brainpower behind a specific business problem or topic. There is no client brief, no rules – just out-of-the-box thinking with a solution that could involve a mix of promotional and communications efforts or perhaps even a change in the way a company or category does business.

Tony Chapman

President

Capital C Communications, Toronto

Tony Chapman has some ideas that pertain to the entire tourism industry that would help Air Canada make money without raiding the government coffers – and give consumers a tax break to boot.

‘Overnight the culture has shifted from dreaming of the next vacation to one of cocooning [due to] a fear of flying and being away from home. Implications are profound. Travel is a $3.6-trillion industry (1998) and employs one in nine employees around the world. It is the last bastion for uneducated workers, 10% of the world GDP, and a key source of foreign exchange for developing nations. This is everyone’s problem.

‘We can only hope as taxpayers that the federal government doesn’t simply bail out Air Canada. It would be like pouring money into a sinkhole. Where would they stop – hotels, travel agents, and the companies that service the airports? Our government needs to be fiscally prudent and, if it comes to it, let Air Canada go through a restructuring.

‘Air Canada could sell an unlimited air travel ticket for a specific period of time paid up front – an economy seat for a year or a business class seat for life. Price the most amazing one, first class for life, at $1 million and it’s guaranteed by the government so if Air Canada were to go bankrupt, you’d get a pro rata portion of that back – something like Canada Deposit Insurance. I think you could sell thousands of unlimited passes – $7,000 for a year’s unlimited flying on Air Canada – and get the cash upfront.

‘Another thing I would do is press the government to allow gambling in the seats on international flights as a revenue base. They do it on cruise ships, why not on airplanes?

‘The government can play a key role in getting people to overcome their fear of flying. In the same way they motivate consumers to save for retirement, first homes, and their kids’ educations, why not let the consumer write off their family vacation on their taxes next year? Each family can deduct up to $5,000, providing they book their travel before the end of the year and providing they travel sometime in 2002. You could even consider an early-bird or stay-in-Canada incentive if they travel in the next 120 days.

‘The government, through the Ministry of Tourism, could then encourage the domestic travel players to work with Air Canada to leverage this by offering consumers a variety of ‘must have’ product based on ‘experiences’ versus simply destination.

‘I believe this would be a more powerful, strategically focused, creatively rich incentive to get people traveling again than simply price or double frequent flyer points.’

David Martin

SVP/CD

Lanyon Phillips Communications, Vancouver

David Martin thinks Air Canada should reconsider the definition of its business and suggests ways of enticing both leisure and business travellers back on board.

‘What Air Canada should consider is that they’re not in the flying business, but the time business. What they sell isn’t a seat on a plane, but a faster, more efficient way of moving from Point A to Point B – for vacation or business. So let’s start by looking for new opportunities to grow those businesses. Regardless of the political and economic climate, Canadians will still take vacations. The question is how far they are willing – or can afford – to go. Why not concentrate on increasing the frequency of domestic travel?

‘High, inflexible airfares are a common complaint among travellers. Some solutions might include: ‘Pay what you can’ days once a month. Or take a page from Famous Players with ‘$250 Tuesdays’ [or another low-volume day], selling any ticket between two points in Canada for $250. Auction off unsold seats on the Internet for last-minute travellers. Base airfares on age, like a movie theatre. Charge less for students and seniors, offer family discounts, and hit adults and business travellers with the full fare.

‘To generate extra revenue, Air Canada could also offer door-to-door service. For a fee competitive with airport limos, you could pick up passengers from their home, and take them straight to the gate. Baggage would be picked up and checked in directly, boarding passes issued on site, and travellers would be given an ‘express lane’ through customs. The same service could be offered on the arrivals end – priority pick-up of bags, sent directly to your waiting car.

‘From a business perspective, Air Canada has no real incentive to change. Business travel is their highest-margin ticket, with reasonably solid demand even through recession periods. Nonetheless, there is room for at least one innovative offering to the corporate world: time-sharing with major corporations.

‘Air Canada could sell flight time to large Canadian corporations on a yearly basis. Bell Canada, for example, could buy one-eighth share of an Airbus A475, representing a block of 400 annual hours of flight time. Bell could then draw from its block of time as it required throughout the year for individual business travel – expensive if only two or three executives are on an otherwise empty flight – or groups, which is great for conferences. They could also choose to assign otherwise empty seats to employees for personal travel or performance incentives.

‘If we follow the ‘We’re in the time business’ logic further, several other new business opportunities also open up. Air Canada could buy or form an alliance with a moving company like Allied Van Lines and offer long-haul, fast moves, corporate or residential. It could buy a courier company like Purolator, and merge it with Air Canada Cargo.

‘In addition to planes and the people who fly them, Air Canada has other assets it could market. Open up Maple Leaf lounges to regular travellers. They would pay for food and drinks while executive class and Elite members would continue to receive them for free.’

Andrew Bruce

EVP/COO

Publicis Toronto

Andrew Bruce suggests Air Canada take a closer look at its core customers – business travellers – and rethink how it’s spending its communications dollars.

‘The first thing they have to do is go after the promotional aspect. This assumes that fear is not an issue. If fear is an issue in travel then it goes much deeper than any marketing can. Sometimes time is the only healer.

‘I think they should have more fun with the way people accumulate [travel] points. I would say fly six times and get one free, something like a coffee card for the business traveller.

‘They could promote flying around weekends by offering a half-price seat for bringing a loved one to make a holiday weekend of it. I think it would be a great opportunity to fill seats that way.

‘I would try to change the experience. I haven’t been impressed with Air Canada’s service of late. I think that’s because when times are tough, budgets get cut. I wouldn’t reduce business class like they’ve announced. I’d rather use the other business class seats to potentially bonus people. If they’re not filling business class, create opportunities to bonus economy travellers so you create more interest and excitement around travel.

‘I think [airlines] can look at best practices and some of the things Virgin Airlines does. They understand that the journey actually begins when you step outside the door of your house or office. Air Canada could play a bigger role there in making travel a lot easier, quicker and more efficient.

‘They should start to show a deeper understanding of the pressures other businesses are under. We’re all coming to the close of the year and we’re figuring out, can this come into this year or is it allowed to go into that year? Can we put this cost off? If Air Canada put the business traveller hat on to see the issues facing business, they might become more creative in how they encourage people to travel while managing and tightening budgets across the board.

‘I was also thinking about their communications. [Air Canada] has been so heavy in sponsorship with its Grand Prix and Olympic work, it almost seems off strategy now for a company that is claiming financial difficulties. It seems decadent. Every dollar they have for communications should be talking about working harder for their customers. It should be talking about making flying easier, making it safer and showing a deeper understanding of business travel and leisure travel.’

If you have suggestions for future CounterStrategy topics, please contact Patti Summerfield at psumm@sympatico.ca.