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Changing Markets, Changing Times. Peter Morris. Peter Morris, Chief Economist, Ascend Peter.morris@ascendworldwide.com. DEMAND Changing size and demographics of markets Changes in Income Changes in price sensitivity Business structure/ practice. SUPPLY Impact of technology

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changing markets changing times

Changing Markets, Changing Times

Peter Morris

Peter Morris, Chief Economist, Ascend

Peter.morris@ascendworldwide.com

changes in customer trends
DEMAND

Changing size and demographics of markets

Changes in Income

Changes in price sensitivity

Business structure/ practice

SUPPLY

Impact of technology

Changes in products

Aircraft

Classes of service

Hubs/ connections

Flexibility

Off aircraft services

Changes in Customer Trends

The Golden rule is: There is no golden rule.

G. B. Shaw

the challenges for airlines
The Challenges for Airlines
  • Customers are generally:
    • Numerous, intelligent
    • have increasingly unlimited channels of:
      • advice
      • comparison
      • communication.
    • And some customers are NOT…....
  • They will ignore meaningless ‘improvements’ in technology or redundant channels
  • Genuine communication valued, but has a cost
  • Vast behavioural database generated - but how many airlines actually make cost effective use of the information?
  • Technology a given- how do you use it against your competition?
aviation corporate travel trends observed
Aviation Corporate Travel Trends Observed
  • Gradual tightening of Corporate travel policies seen since 2000 (accelerated by downturns)
    • Class of travel criteria
    • Range of airlines used
  • Self booking increased, especially on short haul, LCC
  • Widening absolute differentials on C/Y create market for premium economy on medium/ long haul
  • Corporate TA’s holding significant share of value market due to ancillary services (enforcement, reporting, corporate discounts)
  • SME’s find attraction in LCC sites
benefits of technology
Benefits of Technology
  • To whom?
  • ‘I tried to use the Delta version of this...but I was glad I also had the print out because the TSA agent did not have the "special scanner" to read my cell phone ‘ DL Pax
  • ‘However, the delay could have been more substantial if multiple passengers had used mobile boarding passes and had all experienced similar issues.’ AA Pax

Problem of multiple systems and continuing need

for ‘fallback’ solutions – for non users or for systems failures

give them what they want what they really really want
Give them what they want, - what they really, really want…..

Sample of 269 regular global business air travellers, Ascend, March 2010

what do customers think has got worse about air travel in last 2 years
What do customers think has got worse about air travel in last 2 years?

Percent of respondents rating items most disliked

  • Other items (in order)
  • Planes more crowded
  • Higher fares
  • Having to travel economy
  • Decline in off aircraft services
  • Using Low Cost airlines

Sample of 269 regular global business air travellers, Ascend, March 2010

conclusions
Conclusions
  • The ‘new consumer’ is just the ‘old consumer’ using technology when it suits
  • The core needs are just the same - good value, faster service, better products
  • A real challenge for airlines with ‘sophisticated pricing’ to thrive in a full information economy
  • A real chance to use market information for competitive advantage
  • A possible ‘Bow tie’ of success, with larger conglomerate carriers having critical mass, and smaller ‘fleet-footed’ players directing efforts at markets they understand and give just what they want
changing markets changing times1

Changing Markets, Changing Times

Peter Morris

Peter Morris, Chief Economist, Ascend

Peter.morris@ascendworldwide.com