NO-FRILLS' BRANDING TAKE-OFF

Three years after the success of Malaysia's AirAsia sparked a budget airline boom in the region, growing competition is starting to persuade operators to think about a marketing strategy that goes beyond the cost of a ticket.

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One of the first of the no-frills contenders to adopt branding was Thailand's Nok Air, which launched two years ago less than six months after the arrival of two other low fare airlines in Thailand, Orient Thai Airlines' One-Two-Go and Shin Corp-backed Thai Air Asia. Nok soon made a name for itself with initiatives such as Nok Hunt, a reality TV show allowing viewers to help select the airline's cabin crew by SMS voting, and beach check-in for flights from Phuket. Last year, the airline became Thailand's first to offer in-plane advertising, cutting a deal with airline media specialist Oh My.

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"As competition grows fierce, airlines are starting to put more focus on other aspects," says Nok's CEO Patee Sarasin. "We all learn rather quickly that price is not everything."

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These days, Nok isn't the only low-frills contender to shift its focus from pricing to marketing, particularly as soaring oil prices have made it far more difficult to offer the rock-bottom deals of the past two years.

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As competition heats up, low cost carriers (LCCs) are starting to turn to the same strategies and tactics the established carriers use when competition irons out the differences in their product and service offerings.

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Even pricey sponsorship deals are on the radar, with AirAsia set to renew its year-long sponsorship contract with Manchester United in a pact reportedly worth up to US$5.5 million, naming it the team's official low-cost airline.

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AirAsia argues that the tie-up will take the brand into 500 million households around the world, with an eye on young backpackers from Europe and America flying into Asia. The scale of the investment, unprecedented for a LCC, has left some scratching their heads about the wisdom of the deal however.

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What the sponsorship does demonstrate is that AirAsia's marketing has gone far beyond price. As the carrier prepares to take over 70 domestic routes from ailing Malaysia Airlines, and compete with the flag carrier on the remaining 16, the next step is to reinforce branding elements in tactical advertising to ensure a consistent brand image, says Kathleen Tan, its commercial executive vice-president.

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The sector has changed dramatically since AirAsia became the region's first successful LCC three years ago. Southeast Asia now boasts more than a dozen low fare airlines. Meanwhile, China entered the low-cost sector mid-last year with the launch of Spring Airlines, while in March, Starflyer became Japan's fourth LCC.

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In perhaps the strongest sign that this is but the tip of the iceberg, Singapore and Malaysia this year launched purpose-built low-cost terminals in what is seen as a bid for low-cost flight hub status.

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Marketing strategies vary market by market however. Out of four new LCCs in India, only two, budget pioneer Air Deccan and Kingfisher Airlines, the low cost venture of flamboyant beer magnate Vijay Mallya, have crafted a distinct branding platform that goes beyond price. Air Deccan has adopted Times of India cartoonist R K Laxman's 'Common Man' as its brand ambassador, extending its positioning as the airline that led the low cost revolution in India and empowered the ordinary Indian.

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Kingfisher meanwhile positions itself a cut above its rival, and has opted for partnerships with similarly positioned brands to promote its loyalty programme, Kings Club. Following promotions with Malaysia Tourism and a golf tournament for CEOs in Delhi, the airline is now tying up with restaurants and talking with Goa Tourism about boosting visitor arrivals during the monsoon months.

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India's other two LCCs, SpiceJet and Go Airlines, have little brand character, by comparison, a state of affairs agencies feel is unsustainable. "This greyness is going to disappear, and each them will have to stand for something," says Nitish Mukherjee, executive director at Leo Burnett's India arm, Orchard Advertising.

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For the time being however, branding still takes a back seat to cost in India, Mukherjee observes, as LCCs grapple with more pressing issues than marketing such as expanding their network to secure the critical mass they need to offer their price advantage. "(Low-cost) is absolutely central, that's what's driving it at this point in time," he says. "But people will need to sharpen their focus on brand proposition."

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The emergence of LCCs has impacted the marketing of India's legacy carriers. In the region's fastest growing low cost market, Indian Airlines has rechristened itself as Indian and redesigned the signage, while Jet Airways is set to introduce a new uniform designed by celebrity fashion designer Sabyasachi Mukherjee.

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Regionally, established carriers have cut fares on limited seats and launched low fare ventures of their own — there are now five LCCs linked to legacy carriers in the region, with Japan's second largest carrier, ANA reportedly planning two more.

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Asia's large international carriers, however, have not been significantly affected by the LCCs, given the painfully slow pace at which the more lucrative routes are being opened to the sector. The real competition between large airlines remains with each other, as high fuel costs increase the pressure to fill seats. Facing different challenges, low fare airlines are starting to follow their lead, and look at how marketing can help them with their own issues.
"They should be going in the area of low fares, but I think they should also go in the area of fun," says Peter Cheung, project director at RedCard, the agency which helped launch Singapore-based LCC JetStar Asia. "Lets put the fun back into flying. Remember what flying is all about — getting away and enjoying it. All this fun for six dollars, as opposed to this mega price war."

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With competition only set to intensify, both outcomes look likely.