What with security concerns, soaring fuel costs, the promise of increased taxes on harmful environmental impact and the rise of online conferencing, it would be easy to assume that business air travel was in crisis. Indeed, it is currently a very challenging market. Yet the launch of SilverJet in 2006 – with its first flights commencing in January 2007 – as the UK’s first all-business class airline, demonstrates that there are still people who are keen to enter this market.
It recognises that businesspeople still want to conduct procedures overseas, and still want to meet each other. While online conferencing is a cost-effective option, it will never entirely replace meetings, and so there will always be a demand for business air travel. The challenge for those entering the market – and for those already in it – is to make travel more appealing, more affordable and more convenient for those passengers.
Bargain flights
Over the past decade, low-cost short-haul carriers such as Easyjet, RyanAir and Jet2 have revolutionised the consumer air travel market. It is easy to forget now that just 10 years ago booking a flight involved visiting or calling a travel agent, selecting from a limited range of flight times and routes and paying relatively much higher fares. Low-cost carriers have changed all that, and not only for consumers. Businesspeople can now go online to book a flight the next day, selecting the times and routes that suit them best, and often pay less than the cost of the taxi to the airport.
The success of these low-cost carriers has forced established players, such as British Airways and Virgin Atlantic, to follow suit and offer lower priced fares, and on many journeys there is now a wide range of inexpensive options for the business traveller.This has had a significant effect on many businesses, allowing more frequent travel to overseas clients and prospects. For many small businesspeople in particular, this has opened up many new opportunities and improved profit margins.
Private jets
However, not everyone has been so impressed with the effect the low-cost carriers have had on air travel. Marcos Vivian, CEO of private jet firm Big Air, says, “Since the advent of low-cost flights, service has fallen through the floor. There’s no food on these planes and seats don’t recline. They’ve taken away your blanket and pillow and the staff all tend to be stressed out. Also, if anything goes wrong, there is little or no flexibility from these companies. Despite this, there are now many more passengers, all queuing throughout airports that have become even more over-stretched in the wake of heightened security concerns.”
Since the airport security chaos in 2006, many businesspeople returned to rail travel for domestic journeys. Paul East, operations director of corporate travel consultancy FCM Travel Solutions, says, “Rail travel has really grown in 2006 – by around 25 per cent in fact – largely because of the airport security measures. There has been a big increase in travel by rail from London to Manchester, for example. People have also realised that they can work on the train and it is easy to book using online tools.Furthermore, the rail companies have taken on the low-cost carriers in terms of pricing, offering one-way fares and more flexible return fares.”
However, for most overseas business trips, flying remains the only option. Consequently, buying and chartering private jets, such as those from Big Air, has really taken off. Since 2001 the sub-sector has grown twice as fast than the rest of the commercial air travel sector, according to air traffic management agency Eurocontrol.
Netjets Europe, part of US tycoon Warren Buffet’s Berkshire Hathaway empire, is the biggest operator of business jets in Europe, with 1200 customers, up from just 89 four years ago. In the same period, the number of planes it operates in Europe rose from 17 to 112, making it the ninth biggest airplane fleet on the continent.
New players
While clearly an attractive option for the super-rich businessperson, private jets are not available to all. Yet many businesspeople want an affordable option that does not involve waiting for hours at airports and arriving exhausted after a cramped flight. Maxjet launched in November 2005 to try to fill what it saw as a major gap in the market. Originally, it only flew from Stansted to New York, but has since added Washington and Las Vegas to its routes. It has 100 seats in an aircraft that usually hold 220, and fares start at £854 for a round-trip.
While it also targets consumers who want – and can afford – a more comfortable journey, its primary market is small business owner-managers and corporate business travellers. Carolyn Moxon, MD at Maxjet, describes how the company is attempting to communicate with that audience. “We’re working with AW Media in the UK on advertising in the business press. We’re producing eye-catching and appealing ads that focus on the comfort of the service, our on-demand meals, premium brand drinks and top-notch entertainment system, together with the affordable price.”
She continues, “We’ve also been doing a lot of partnership work with organisations such as the Institute of Directors, British American Business and the Chartered Institute of Management Accountants. All of this marketing work is resonating well with the new breed of discerning business traveller and our operation is expanding. Next Spring we’ll take delivery of two more aircraft and will then open up new routes and increase the frequency of our services.”
Others have noticed its success and are seeking to emulate it. Maxjet now faces competition not only from Silverjet, but also from newly-launched French airline, Elysair. Since December it has been operating six flights a week between Paris (Orly) and New York (Newark) airports.
During 2007, we can expect to see more purely business-class airlines looking to cash in on this potentially lucrative market.
Major players
The established carriers have begun to respond to this increased competition. British Airways has launched its New Club World service with a bed that is 25 per cent wider and offers more privacy and storage. The £100 million roll-out across its fleet will take approximately 18 months and result in eight per cent more business class seats.
Virgin, in turn, responded with a three-week poster and print campaign, designed to show how much more space there is in its Upper Class Suite.
Increasingly, tactical marketing by airlines is moving online, particularly in the US. Ralph Browning, regional director at Carlson Marketing, says, “In February 2005, South West launched its popular ‘Ding!’ service. This software provides desktop alerts of promotions and offers, and the characteristic noise it makes has become a common feature of many business travellers’ working days.”
In the UK, BA has been running a concerted ad campaign to promote its website and online booking.
Tim Gibbon, director at PR agency Elemental, stresses the importance of search engine marketing to airlines. “Businesses are using the Web to research, compare and purchase their flights, and with so much market saturation, all businesses in the online travel market should be incorporating search into their marketing strategy. Airlines should be looking to target hard and soft key words and key phrases to complement what they are doing in the rest of their above and below-the-line activity.”
Green skies
However, there are signs that the key marketing struggle in the long-term will be for positioning as the ‘green airline’. Emissions from air travel have doubled since 1990, and now make up six per cent of the UK’s carbon emissions.While many travellers choose to pay to offset the emissions from their journeys, airlines – like post-Stern Report political parties – are keen to stress their environmental credentials.
In September, Sir Richard Branson announced that he will invest all profits from his travel businesses – including Virgin Atlantic – in businesses that develop renewable energy.
In October, British Airways sponsored the offsets of all carbon emissions produced by delegates’ travel to the business travel industry’s first low carbon convention in Barcelona (see B2BM Nov/Dec 06, p8). It also claims to be the only airline offering carbon-offsetting to travellers who book online.
We can expect to see much more of this during 2007 as established carriers do all they can to find a meaningful point of difference from low cost business-class carriers.
Silverjet takes off
Whilst leading business carriers, such as BA, are seeking to enhance their environmental credentials in order to win the hearts and minds of travel decision makers in these increasingly environmentally-aware times, videoconferencing suppliers, such as WebEx, are asking companies whether they need to travel at all. WebEx is working with agency DNX to promote itself as the green alternative to business travel, as well as a facilitator of more collaborative ways of working. A variety of media is being used to communicate with senior executives across a range of sectors, including PR, email and online advertising. Alex Brayshaw, account director at DNX, comments, “We’re addressing the travel issue in a number of different ways: as an economic alternative to expensive and unnecessary travel, and suggesting that it should be part of an organisation’s corporate social responsibility policy to reduce unnecessary travel.” DNX is using the environment as a key campaign issue for WebEx across the entire EMEA region. “Travel and the environment are just as high profile in other markets. Scandinavia, for example, takes the environment very seriously,” he comments.
