The importance of low cost airlines to tourism ...and how to work with them
Introduction Low cost airlines began life in the USA, subsequently crossing the Atlantic to the UK and Europe. They are fast becoming a phenomenon in many other parts of the world and are having a dramatic impact on travel and tourism patterns in the countries which they serve. In order to work successfully with low cost airlines and to get the best from them, it is important to understand their business model and to know what they will look for from potential business partners. Drivers Low cost airlines stimulate existing markets and create new ones. By offering widely available low fares with few rules and restrictions, what low cost carriers have done is to enfranchise a much larger group of travellers than could previously be reached by traditional airline pricing. Many existing travellers have been permitted to travel more frequently while a whole new market has been created for thousands who could not afford to fly.
Customers While a number of low cost users are travelling on business, as a general rule the large majority are leisure travellers; a daily low cost service can bring in over 50,000 travellers a year to a city or region ready to spend millions of euros during their stay! Low cost airlines have familiarised their customers with the ease of using the internet and they tend to be comfortable constructing their own holiday arrangements via the web, booking flights, hotels and hire car online, at home.
Typically low cost travellers are in search of quality, culture and adventure rather than being driven by price only, as such these customers will tend to be higher profit margin. They are seeking new and interesting destinations and experiences. Thanks to low cost flights, they will visit more often, frequently out of the traditional tourist season or they may help to extend the season. Partnerships So if low cost airlines are the means to bring these lucrative customers to your destination, how do you go about working with them? First of all, there are many different low cost airlines and not all of them follow the same strategy, or have the same financial strength. Some focus on particular countries and on major airports while others, such as Ryanair in Europe, will look for widespread coverage and focus on smaller airports so it's a case of approaching the ones that are most likely to be interested in your town or region. Secondly, researching the track record of a company is useful; there have been several bankruptcies in the industry already and there will certainly be more. There can be nothing worse than to succeed in winning a new route, only to find it is terminated due to the failure of the operating airline. Very much linked to this point, given the low fares philosophy of low cost airlines, the most profitable will make tough demands in their negotiations. They will seek:
As low cost airlines are driven by high volumes and load factors, underpinned by low fares, they need a low cost base for the long term, not only for a short introductory period, and this needs to be factored into the financial planning for local business partners such as airports and tourism boards. With regard to marketing, low cost carriers tend to adopt a simple approach - very high profile destination and price advertising. They are not looking for a more glamorous image or branding approach for example. In markets such as the UK where there is intense competition for consumers' travel spend it is essential to maintain high visibility of this kind, on a continuous basis, if any destination is to prove successful. This type of promotion costs millions of euros and low cost airlines will seek the maximum financial contribution from local tourism partners for such campaigns in order to share the risk.
In addition, recognising the internet based marketing and sales of low cost airlines, there can be some excellent opportunities to work with them on joint web promotion. Banners on low cost airline websites and links to other sites can really help raise consumer awareness of the strengths and attributes of your destination. As mentioned earlier, low cost airline customers place a strong emphasis on quality of experience rather than only on price - products must still however, represent good value for money. In order to convince a low cost airline that your destination is right for them it is therefore necessary to demonstrate the quality of your offer and to outline its unique selling points. If there are fine restaurants, local cuisine, interesting points of historical or cultural interest or other special niches, then promote these to the prospective carrier. Remember, competition is tough so the strongest possible case needs to be presented! Conclusions In summary, low cost airlines have expanded and created many new markets in the last few years. This expansion is going to continue and airlines will be looking for new destinations to add to their networks. There can be enormous economic benefits to attracting an appropriate low cost service but it is important to go in with eyes wide open when seeking to negotiate with a prospective carrier. Long-term commitment is needed, financial resources are required but, with a well constructed deal, there can truly be a win win deal for airline, airport and community alike. John Strickland is Director of JLS Consulting and has considerable experience in the commercial air transport business. He was previously responsible for network development with low cost airline buzz and provides regular expert commentary for BBC business programmes. John can be contacted via: |
Low
cost airlines have transformed the way we think about travel.
But what's their real value to tourism and how can we work with
them most effectively? We ask John Strickland, a leading commercial
air transport consultant, to share his views on the subject. 
In
order to offer these low prices profitably, low cost airlines
will aggressively seek ways to maximise productivity while keeping
costs to a minimum. In summary, this means selling most of their
seats via the internet, not paying commissions to travel agents,
operating more flights per aircraft than traditional airlines
and negotiating very low cost deals at destination airports and
with tourism partners. I shall return to this point shortly.
These
customers tend to be from the higher social groups with above
average incomes, certainly, low cost should not be confused with
low spending, for most, the money saved on the cost of a flight
is happily spent on activities at the destination. They are generally
discerning travellers looking for more than simply 'sun and sand'
(though this is equally valid on some destinations)!
To be successful in attracting and working with a low cost airline, it is therefore important to count on a significant financial commitment but also to avoid becoming too 'tunnel visioned' about local branding, identity and editorial issues. These may be important locally but will not necessarily be critical influences to the successful launch and ongoing promotion of a new route.