They're some of the most profitable carriers - can smaller tourism businesses learn anything from low cost airlines?
They have a reputation for offering cheap prices, and yet they're not necessarily the cheapest. Here are some lessons I think we can all learn from low cost airlines.
Lesson 1. Don't cut prices. DO price carefully
The low cost airlines didn't set out to be simply cheap. Their starting point wasn’t to cut prices. It was to look at their costs, considering each one in detail, and finding ways of doing things differently. Sometimes this meant removing elements of service (some Ryanair planes don’t have seat pockets or trays, cutting down on the cost of planes and the weight of the aircraft which affects fuel consumption), or charging for services such as priority boarding, catering and excess luggage. The lead-in price and starting point for promotional fares is low but not the final price.
In a downturn, many accommodation providers and restaurant owners cut their prices to attract more business. The net result is pressure on service quality. This may lead to losing customers or the demand for lower and lower prices because of poorer quality service. Taking the low cost airline approach of looking at costs and how to improve profitability might be more effective.
For example, a self-catering accommodation cottage owner may offer a lower starting price but charge extra for providing bed linen and towels. This means the holiday maker has a choice – a lower price but they have to make their own beds and wash their sheets or a higher price. I tried this for a season with my holiday let. None of the holiday makers ever takes the lower priced option, but they do feel they’re getting a choice. Interestingly when I offered this option, they were always grateful to be offered the choice, but also almost grateful to be able to pay and have the beds made ready for them! It's important to present such a choice in the right way.
Lesson 2. Do things differently. Turn established practices upside down
Pioneers like Easyjet's Stelios set out to do things differently. The established practice was to charge much more for single flights and for flights that didn’t include a Saturday night stay. Low cost airlines sell single tickets, and don’t care how long you are away. When they first started, Easyjet's main marketing method was simply being different enough to generate free media coverage.
How could this idea be used elsewhere? Guests traditionally pay for overnight accommodation, with evening arrival and morning departure. Bedrooms remain empty during the day time when they are cleaned, although cleaning typically takes less than an hour a room. A handful of city hotels have started offering a reduced rate for very short day stays for people wanting a city centre afternoon-nap or brief rest between flights at airports.
Lesson 3. Be an expert up-seller
The “lead in” price for easyJet or Ryanair flights is cheap. However, the final price that flyers pay can be comparable to other established carriers. Cheap prices don’t mean low profitability because the low cost airlines are experts at up-selling. Every element of the flight experience has been costed, from initial booking to final landing.
Up-selling happens at every stage from booking to landing - encouraging fliers to pay for priority boarding, choosing a specific seat, additional luggage, food on board, entertainment, onward travel tickets, and even scratch cards. Some of this can be tiresome but we can still learn lessons from it.
How often do we make a real effort to up-sell in the remainder of the tourism industry?
Lesson 4. Offer straight forward prices
Their pricing structure is very simple compared to traditional carriers. Fares don’t vary according to flexibility criteria or length of stay. Everyone pays the same price depending on what is available at the time of booking.
Making the price clear and easy to understand is part of making it easy to buy.
Lesson 5. Have a strong, simple promotional message and strong brand
Low cost airlines’ promotional messages are very simple. They are usually restricted to a single message e.g. new destination being served or lead in price for a particular destination.
Brand image is very strong. EasyJet’s marketing budget was stretched much further by their outstanding use of an orange colour so vibrant and “loud” that few other organisations have ever used it! This simple idea meant that in branding terms at least, easyJet now “owns” the colour orange.
Design costs are kept low, using a standard and very simple design for all livery, websites and advertisements. The price and destinations are the focus for promotions. Nothing else is used, letting the message stand alone, proud and strong.
Lesson 6. Be totally committed to your product and generate media coverage
When they started out, the owner of easyJet became a brand in his own right. “Stelios” was a key figurehead, acting as personable spokesman for a variety of aviation and business-related topics, keeping the airline in the media through creative PR, in a similar vein to Richard Branson.
I once flew on a London to Nice flight when Stelios was on board. As soon as the seatbelt signs were off, he jumped up and moved through the cabin asking every single person what they thought of easyJet and why they were on that flight. When asked about this, he said he did this frequently as a way of remaining close to the passengers who pay the fares. He joked that he never paid for market research – he did it all himself. So he saved money on research and generated a lot of word of mouth publicity by being on his own flights.
How many businesses have managers who show such commitment to their own product? When was the last time the owner of a prominent attraction was seen being terrified on their rides or directors eating in their own restaurant?
Lesson 7. Don't skimp on quality
It would be a mistake to think that low cost airlines skimp on quality. They don’t. Take an easyJet flight and it soon becomes apparent that staff are just as keen on safety standards as BA.
The aircraft are just as new (deliberately so - new aircraft being more dependable, more fuel efficient and cheaper to run). Efficiency and safety are seen as still being key to their success.
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Please note: all articles are copyrighted Susan Briggs