Relationship Marketing in Top UK Airlines - Essay Example

Running Head: Relationship Marketing in Top UK Airlines Relationship Marketing in Top UK Airlines (School) Relationship Marketing in Top UK Airlines Customer convenience is a key element in marketing airlines on the Internet. The relationship between an airline and the people it serves has become one of the most important factors in an airline's success. The customer used to be an afterthought in business plans, but companies are beginning to realise that a good relationship with customers means a successful business. In the UK, three specific airlines lead in the marketplace, and the way in which they conduct business as well as their online image will be the focus of this paper. Under discussion will be easyJet, Ryanair and British Airlines (BA). The first two are low-cost carriers and the third is a traditional international airline. All three have a website on the Internet and accept booking online. EasyJet and Ryanair have put low prices over customer convenience, while British Airways continues to put service above price. http://www.ba.com http://www.easyjet.com http://www.ryanair.com The Emergence of Low-Cost Airlines In 2001, the attacks on the World Trade Center and Pentagon reverberated throughout the world, especially with airlines because commercial aircraft were used in the attack. British Airways and other major airlines announced massive job cuts while the low-cost airlines surprisingly reported increased profits. Why would a company like easyJet outperform the giant British Airways Two possible reasons were development of deregulation and an open skies policy put into place which allowed low-cost airlines the freedom to compete with low 'no frills' prices (Discount airlines 2006). The idea was to eliminate unnecessary costs with customers paying much lower prices for tickets while giving up certain creature comforts (Welcome to Companion Website, 2001). The major reason for the success of low-cost airlines, however, was instituting marketing through the Internet, offering online booking for the first time. By 2002 Ryanair and easyJet had operating margins far above traditional airlines, including 45% more than British Airways. In the United States 270m people were utilizing 1000 low-fare jets with another couple of hundred on order. In Europe 410m shared 400 low-fare jets (Binggeli & Pompeo). While other low-fare airlines came and went, Ryanair and easyJet continued their popularity. By 2004, however, traditional carriers such as BA began to catch up to budget airlines. Intense competition and rising fuel prices caused plummeting share price at easyJet in May, and in an online analysis of the airline industry, it was found there was an increase in visitors to online sites for budget airlines, but traditional airlines showed a higher visitor rate (Cahill 2004), perhaps an indication of the growing connection between customers and business. In 2006, BA not only continues to be the leading international airline in the traditional market, it is surpassing the no-frills market with discounted prices and special deals through its web site. Customer satisfaction is a factor that leads to success in the current marketplace, and the airline that understands this will grow in popularity. Pros and Cons of Budget Airlines In the low-cost budget airline business, easyJet and Ryanair continue to be the largest companies in the European low-cost market. These pioneers were the first to utilise the Internet for online booking. They maximized assets by decreasing turn-around time at airports and ending free on-board catering. Ticketless travel and intensive use of information technology (IT) increased visibility (easyJet Case Study 2006). However, the major hubs that serve these airlines are Stanstet, Luton and Gatwick, not the most convenient airports. Wizzair and SkyEurope are new airlines in Central Europe flying into these hubs and are in competition with the low-cost British airlines. One difficulty faced by the airports used by budget airlines is the extra time and expense of getting to them. Ryanair has a reputation for having the lowest prices of any airline, but they also operate in secondary airports of cities in order to cut costs. (Low Cost 2006). The budget airlines do charge exceptionally low prices for tickets, but there are hidden costs. The listed ticket price is for one way and does not include taxes and extra charges. With taxes added, it is possible that the ticket will double in price. Ryanair prides itself on having the lowest prices, but the extra charges are not set forth. Although it is first come/first serve for seating, there is no monitoring to be sure early birds get the best seats, although it should work that way. Snacks and sandwiches as well small bottles of wine are available for a price. Perhaps the most damaging result of this type of low-cost marketing is the change in the attitude of the flight attendants. Apparently, in order to cut costs, the personnel pool has been cut as well and employees simply don't have time to spend on customers' requests. Online reviews of the budget airlines would indicate that the flight attendants are not always friendly and cooperative, unlike previous years in the industry. (easyJet reviews 2002). Low-Cost Carriers Moving from Personal to Business Travel The popularity of low-cost carriers (LCC) has been growing in the business world, according to travel agencies, but the actual benefits are often reduced as access to secondary airports creates a constraint for potential savings to a majority of corporations. Even so, LCC ticket prices average 50% cheaper than negotiated corporate fares. Is a discounted price enough incentive to continue the trend Travel agencies don't see LCC as an alternative to negotiated fares, but if a company happens to be in the vicinity of one of the secondary airports, there might be a worthwhile savings on utilizing the LCC service for employees. According to Carlson Wagonlit Travel, the major impact on LCCs might depend on the reactions of the traditional airlines which are showing a continuing focus on quality of service, maintaining the comfort of passengers, and offering discounted prices of their own (What Benefits 2003). The Benefits of Relationship Marketing British Airlines, the leading international airline in the UK and Europe, has utilised online marketing opportunities, search marketing, partnerships and affiliate networks by integrating the strategies of the no-frills airlines. They have also incorporated the importance of customer satisfaction into their relationship marketing, along with a number of discounted fares and special packages designed to offer savings. They have utilised the Internet to sell their product in a low key, sophisticated way that offers special perks to Executive Club members and registered customers. Once a company has created a positive public image, it is important to retain that image in the marketplace. The use of the Internet for online booking and news updates in the airline business is growing day by day, and British Airlines is taking advantage of this opportunity to make sure their customers know the company is continuing to focus on their personal satisfaction. When travelers go to the British Airlines website to book a flight, they are not only assigned a seat but can choose their own seating from an online chart; they are given information on services, with complimentary meals and snacks, depending on timetable of their flight. They fly out of Heathrow and land in other major airports. When the plane leaves the ground, the flight attendants make sure the travelers are comfortable. The seats are roomier than those in a discount airline. Entertainment is available, as well as magazines and a free newspaper. If there is a problem and the flight is delayed, the travelers are compensated. It's all about customer satisfaction, a focus on creating a positive corporate image. They give their customers the choice between paying a price for total comfort and choosing a lower price without that much sacrifice. It might be slightly higher than the budget airline price, but the extra attention is worth it. The impact of the Internet on customers cannot be ignored. In 2000, Amelia Kassel noted that effective market intelligence used to be collected by tracking a few thousand publications. Since then, however, she said, "there are millions of web sites where crucial market intelligence and criticism can appear, available for viewing by over 100 million wired consumers" (PR: Executive Summary, par. 4). At the present time, with the wireless technology available, there are undoubtedly millions more. Effects of Online Visibility on Customer Base Within the next five years, if not at the present time, the Internet will determine how people see the world of business. Society is already global, with instant news available online, with email taking the place of posting letters and with increased buying online using credit and debit cards for payment. An analysis of the three websites under discussion show certain characteristics that define each website. The way in which the public sees each of these airlines is very much determined online. Web design has a strong impact, and easy access to information, interaction between customer and airline and the attitude of the airline toward customers create a portrait in the mind of person accessing these sites. Each of the websites has a specific color scheme which immediately impacts the user. EasyJet (http://www.easyjet.com) is tangerine orange and grey, and it tends to explode on the page, assaulting the eye of the customer. All of the normal methods of selecting flight information as well as ability to check on hotels and car hires are set up on the page, but finding details about the flights and what services are available and what, other than price, might benefit the traveler are not that easy. At the left bottom of the page there is option to ask a question which leads to a "Search Text" capability, but no simple listing of services in any convenient place. The focus of the website is on the low prices available with advertisements of various special offers. The only interaction between customer and airline appears to be the ability to ask a question. Ryanair (http://www.ryanair.com), an Irish airline with a base in London utilises a number of different colors for its active website__blue, gold, red and violet__and the result is quite busy, highly visible with changing colors but not so easy to use. The focus on this webpage is on "cheap" prices. They have recently added a new service__online check-in__which is a plus. At the top of the page the tabs allow the user to ask questions and get information on services outside the airline, for instance, hotels and car hire. Booking information can be filled in on the left side of the page. British Airways (BA) (http://www.ba.com) uses dark and light blue with deep red accents to create a site that is easy on the eyes. Here, booking information is in the middle of the page with a log-in form on the right which immediately creates interaction between the customer and the airline. Up-to-date information can be accessed to the left of the booking form, and on the far left side of the page, there is a list of various subjects that might be of interest regarding special offers, planning a trip, booking a trip, online check-in, customer support and corporate travel. What this website lacks are the hard-sell ads present on the low-cost airline sites. A comparison of these three web pages would lead users to first make the decision about what priority they will be setting in their travel plans before they make a commitment. If low price is their priority and they are willing to take a chance on having everything go well, Ryanair is the cheapest of the three, followed by easyJet. If, however, they are able to take advantage of special offers which are slightly higher than budget airline prices, and the flight is as important as the destination, a traditional airline like BA might be the preference. Effect of Search Engines on Airline Reputation Search engines are so much a part of Internet use that the results can create a positive or a negative view of any subject within the search criteria. By using the Google site to find easyJet and Ryanair information, it was quickly obvious that budget airlines do not fare well on search engines. Once the website URLs are listed, the other references to easyJet and Ryanair listed reviews (not always positive), business news (not always positive) news about strikes, about mergers and several complaints. The basic findings made it clear that budget airlines do not offer guarantees. The easyJet Review (2002) referred to earlier made this very clear. Mark Kahler reviewed easyJet on his About.com site (2002) and gave some helpful suggestions for people choosing to use a budget airline. For a trip from Riga to Berlin he paid $30 USD one way, including taxes and fees, which he considered very reasonable. On a second trip from Paris to London, the cost was $60 USD per person one way which was still a good price. There were, however, negative repercussions in terms of customer service. The flight to London was late, the ques were long, the airport was chaotic, and Kahler did not feel he received any kind of support from the easyJet staff members. He offered some suggestions for people planning to use easyJet: Factor in ground transportation costs. Luton is a 30-minute train ride away from London. Be aware that the check-in closes 30 minutes before scheduled flight, and there are absolutely no exceptions. Ryanair also received a great many negative listings on Google, with complaints of "chopping and changing flight schedules", concerns about distances from major cities at secondary airports and the hidden costs in apparently low prices. Ryanair has also recently started charging for baggage. A search for British Airways did not bring up any complaints. In fact, a large number of gateways to various sections of BA sites were listed on pages of Google. An e-mail marketing service provider has recently been added to BA for Executive Club members and registered customers on its website. One important area in which British Airways is involved is Oneworld Alliance, with eight airlines joined in a global effort to work together emphasizing service in flight and on the ground, especially to passengers with onward connections (Oneworld 2006). Conclusions Possibly the most obvious result of this study is to show that relationship marketing is the way of the future. The Internet, after all, is made up of people from all over the world, and those people are the customers who have the ability to erode the foundation of a company with their feedback. In every facet of the business world, including health services, education, transportation, or any other service industry, the focus is presently on global affairs and, in addition, the connection between business and the public. British Airlines has joined the global partnership, and by doing so has confirmed their positive standing in the marketplace whilst the budget airlines serving Europe are limited to a specific area. Until they look outward and see the people they are trying to serve as the most important part of their marketing strategy, it is likely that those with a wider vision will continue to grow, and they will not. References Binggeli, U. & Pompeo, L., McKinsey. 2002. 'Hyped hopes for Europe's low-cost airlines'. The McKinsey Quarterly, No. 4. Available from: http://www.euractiv.com/Articletcmuri=tcm:29-117632-16&type=Analysis [25 March 2006] Borgman, Jean. 2006. British Airways Selects e-Dialog as Preferred E-mail Provider. Press Release 2 March 2006, e-consultancy. Available from: http://www.e-consultancy.com/newsfeatures/360996/british-airways-selects-e-dialog-as-preferred-e-mail-provider.html [24 March 2006] Cahill, Jannie. 2004. No-frills airlines facing ever increasing competition from traditional carriers online. Press Release 18 May 2004, e-consultancy. 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Available from: http://www.airport-parking-shop.co.uk/newsletter/04-10_article-budget_future.html [24 March 2006] Read More