If there was ever a time to be afraid of flying, it’s now. An industry that seemed to have been pulling up its socks after the uncertainty of 9/11 has been hit with several whopping curve balls in the last several months. Economic recession, war in Iraq, the outbreak of SARS and finally, Air Canada’s bankruptcy, has done little to help a flailing business.

In the U.S., the Air Transport Association has cited up to a 20% drop in air travel in the last month. In terms of Canadian air traffic, Air Canada seems to be losing ground, while the smaller carriers are gaining.

Air Canada flew 10.1% fewer revenue passenger miles (RPMs) in March 2003 than in March 2002. (RPMs are a measure of air passenger volume; one RPM equals one paying passenger carried one mile.) But Montreal-based Jetsgo reported a higher number for March of this year, with RPMs reaching 73.6% versus February’s 72%. The airline also expanded its year-round service and added summer destinations. And Calgary-based WestJet increased its RPMs by 49% in March of 2003 over March of 2002.

‘Air Canada is in an especially bad position because it’s not well-regarded anyway,’ says Alan Middleton, professor of marketing at York University’s Schulich School of Business in Toronto. ‘You’ve got a not very cheap, not very reliable airline, and on regular runs, you try flying to Vancouver in the middle of the week these days and it will cost you over $3,000.’

Middleton believes a smaller carrier like WestJet has a better chance of surviving, provided it doesn’t overextend itself. ‘They’re offering relatively no frills, good value and limited routes. Air Canada thought they destroyed the competition, but through their bigness and bad strategy, gave rise to the effective organizations.’

Meanwhile, ad spend in the category has been decreasing dramatically over the last few years. According to Nielsen Media Research, total ad spend for the airline industry in Canada in 2001 was just under $56 million – compared to over $82 million just two years prior. With little money to spend on advertising, the focus of many carriers is on price-based messaging or, in the case of Air Canada, full-page newspaper ads to allay consumers’ fears of booking.

Air Canada has been advertising in major dailies to inform consumers about its recent bankruptcy filing. Laura Cooke, spokesperson for the airline, explains the point is to let people know that it’s business as usual and ‘communicate to customers and stakeholders that they can continue to book without worry.’ Air Canada has also been communicating with customers via e-mail, keeping the six million Aeroplan members informed, and posting information on its Web site (www.aircanada.ca) regarding the big issues. The airline also implemented a flexible booking policy on March 19 to deal with customers’ concerns over SARS and the war in Iraq, which will be upheld on flights until May 31.

Cooke says that due to the current situation, the airline has reduced its capacity by 15% during the months of April and May. As well, Air Canada will reduce discount airline Tango’s capacity by 40% in July and August, with flights being deferred to Zip Air. ‘We’re facing diminishing demand coupled with a sluggish economy,’ she says.

‘No airline has the luxury of full-on campaigns,’ adds Jennifer Goddard, co-CD at Marketel, Air Canada’s advertising agency. ‘The situation is too fragile for anybody to be doing branding campaigns. Communication is going to be fairly factual.’

However, not all airline companies would agree. Jetsgo, a new player on the Canadian airline landscape, has been focusing on price-based advertising since it entered onto the scene a little under a year ago. The airline regularly advertises its low fares in daily newspapers, outdoor billboards, and on the radio. But according to president Michel Leblanc, Jetsgo also has a summer branding campaign in the works that launches April 28. Comprised of radio and movie theatre advertising by Montreal-based Braque Advertising, Leblanc says that as the airline adds new destinations – it recently entered the Alberta market – it wants to communicate the benefits of flying. ‘We’re basically trying to tell people that to have a pleasurable vacation, fly, don’t drive,’ says Leblanc.

Jean-Marc Demers, president of Braque, says the identity campaign, ‘relies on the fact that consumers know Jetsgo as a discount carrier,’ but that it further conveys the message of the airline as a fun, yet no-nonsense option by focusing in on the smiley face logo that’s been a hit with kids. Jetsgo’s core business has primarily been the business traveller, says Demers, but in summer, the focus is more on family travel.

Morten Beyer, international aviation consultant, Morten Beyer & Agnew, Arlington, Va.

When the airlines are called to comment on [issues like SARS], maybe they should take an aggressive and positive position. As long as there’s this much media hysteria, there’s not much you can do except, when you have a chance to comment, comment on the statistical idiocy of this concern. It’s nonsense in terms of any statistical risk – maybe the airlines ought to promote that instead of just hunkering down and suffering in silence.

Other than that, you have to just let time pass – people will come back to their senses. I don’t think price is really going to solve the problem, it may just make it worse. Ten percent of the passengers stay away completely and 90% of them fly for half fare – that’s not really going to solve the airlines’ problems. I think it’s pretty obvious the airlines don’t know what to do.

Instead of giving away the tickets, why not advertise how great the service is? If they have money to waste on low fares, they certainly have it to spend on constructive promotion. [And] maybe they should give people something to eat on their flights.

Most of the airline advertising tends to be about how wide seats are and how much seat spacing they have. [However] that doesn’t produce passengers.

Alan Middleton, professor of marketing, Schulich School of Business, York University, Toronto

What we’re seeing is a shift in the airline industry from added value and service to price and convenience. And I don’t see that going away this year. What can they do? Get their capital together, try to put together a decent combination of non-gouging fares and service and hang in, but strip costs out of the system. It’s going to be less of an outbound marketing year than an inward-looking one.

I don’t expect to see very much classic brand image communication. [This can be detrimental if] you don’t have a good image in the first place, like Air Canada. I think they should focus on pricing mostly. They should re-engineer the whole airline to be a low-cost producer like Jazz and Tango. But in the interim, what they’re most likely to do is sell them off.
My general advice is: Hunker down, but when the business comes back, please pay attention to customer service, which Air Canada never did. If you’re a small price-oriented airline, stay within your means and don’t get ambitious to take over from Air Canada.

[As for SARS], if you talk too much about it, you raise it as an issue even more. Unfortunately when you’re dealing with safety and health, virtually all travel will be dramatically curtailed. Consumers will go more to their cars.

Steve Boyd, partner, CD, Tag Advertising, Calgary

Certainly Air Canada has done the ‘we’re back’ a few times. Consumers accepted it a few times and there is skepticism for sure, but consumers also know that they need Air Canada and they want Air Canada. It could be redefined for sure.

Air Canada has been buying big newspaper ads across the country. Nobody’s buying that it’s business as usual. It’s going to be proof in the pudding. Everybody is waiting to see and hoping.

[But] Canadians harken back to the history of the airline. They’ve seen those old ads and they’ve seen ‘Trans-Canada Airlines’ decades ago and there’s a pride in that. I think their loyalty will come back. [The current airline situation is] not just a Canadian thing. It’s a global thing. When Air Canada comes back, I think they’re going to have huge support. Nobody wants to see Air Canada disappear.

Regional airlines will pick up business for sure. WestJet knows its markets, they market well. They tell consumers about flying from Abbotsford to Calgary. It’s the no-frills thing. Small, regional airlines need to make sure that they stand up and jump into the void that has been left by Air Canada. They need to focus on their market, and focus on their benefits in that market. [They shouldn’t] try to be Air Canada. Tell people what they’re offering and it will sell itself.