airline category survey - economist group...1. usa today, april 5, 2015: “business travel is back,...

Industry trends through the eyes

of Economist readers

AIRLINE CATEGORY

SURVEY

AGENDA 2

Survey sample and methodology 3

Overview: Economist readers and air travel 7

Focus 1: Business travel and freedom of choice 11

Focus 2: Premium flyers’ growing importance 18

Focus 3: Increasing competition and technology 25

SURVEY SAMPLE AND

METHODOLOGY

OBJECTIVE

To explore three trends in the general airline market among Economist readers:

1) Cost-cutting and increasing lack of choice in air travel for work (and whether Economist readers are

subject to the same restrictions)

2) The growing importance of premium cabin flyers (and what we can learn from our readers about what

these flyers seek from air travel)

3) The increasing role of technology and level of competition in the market (and how Economist readers

are faring in this new environment)

We hope these findings will help our airline clients refine their messaging and communications, particularly

within The Economist and among more affluent, well-traveled consumers.

4

ALL ABOUT THEIR THOUGHTS

ON AIR TRAVEL

1,052 READERS FROM AROUND THE WORLD ANSWERED

QUESTIONS COVERING THE FOLLOWING TOPICS:

Flying behavior (# times flown, class flown)

Likelihood to travel in first or business for business

compared to before

Use of technology in the travel process

Approximate spend on air travel

Degree of choice and influences/reasons

Research/shopping methods

Brand familiarity and opinions

Frequent flyer programs

Qualitative questions on the decision to travel for

business, the state of air travel, and suggestions

for improvement

Responses were fielded over a one week period

in May 2015.

5

248 ASIA PACIFIC

327 EUROPE

34 LATAM

386 N. AMERICA

REGIONAL SAMPLE TOTAL SAMPLE SIZE: 1,052

6

51 ME & AFRICA

OVERVIEW:

ECONOMIST READERS

AND AIR TRAVEL

7

usually fly first or

business while

traveling long-haul

for work; more than

half fly first, business

class, or premium

economy for long-

haul leisure

54% have taken a short-

haul or domestic

work-related round-

trip flight in the past

12 months; 46% have

taken a long-haul

flight

have taken a short-

haul or domestic

round-trip leisure

flight in the past 12

months; 51% have

taken a long-haul

flight

74% 87%

8

* Round-trip including non-flyers

Q4/5: How many business/leisure round trips have you taken in the past 12 months?

ECONOMIST READERS ARE PREMIUM –

AND FREQUENT – FLYERS

Avg. # Flights* in P12 Mo.

Domestic Business: 4.9

Intl (<6 hours)

Business: 2.8

Intl (6+ hours)

Business: 1.9

Domestic Leisure: 2.1

Intl (<6 hours)

Leisure: 1.8

Intl (6+ hours) Leisure:

1.0

TOP AIRLINES FLOWN

PREVIOUSLY BY REGION

9

Q17: % Top Box (I have flown with this airline before)

* Low sample; use with caution

** Low-cost airlines were only shown to regional respondents

NORTH AMERICA 1. United (93%)

2. American (91%) 3. Delta (89%)

4. Southwest (74%)

5. British Airways (65%)

EUROPE 1. British Airways (87%)

2. Lufthansa (81%)

3. KLM (74%)

4. easyJet (73%)**

5. Air France (72%) ASIA PACIFIC 1. Singapore (78%)


3. Cathay Pacific (67%)

4. United (61%)

5. Qantas (61%) MIDDLE EAST & AFRICA


2. Lufthansa (75%)

3. Emirates (75%) 4. American (71%)

5. Delta (67%) LATIN AMERICA*

1. American (97%)

2. United (88%) 3. LAN (82%)

4. Delta (79%)

5. Iberia (79%)

UNITED IS THE TOP LOYALTY PROGRAM

36

32 33

28

25 22

36

16

25 25

20 18

9 10

13 13

6 7 7 6

27 26 23 23 21

17 13 12 11 10 9 9 8 7

4 3 2 2 1 1 1 1 Other Unit. AA Delta BA Luft. Air Fr. Emir. None KLM Air

Cana.

Qant. Sing.

Air

Cath.

Pac.

Swiss. Iber. KAL LAN Turk.

Air.

Air

Chin.

ANA JAL

Top Frequent Flyer Programs

% PRIOR FLYERS in Loyalty Program % TOTAL RESPONDENTS In Loyalty Program

10 HOWEVER, EMIRATES MATCHES UNITED IN ITS SUCCESS IN CONVERTING PREVIOUS

FLYERS TO ITS LOYALTY PROGRAM

Q19: With which of the following airlines are you a frequent flyer/rewards member?

FOCUS 1:

BUSINESS TRAVEL AND

FREEDOM OF CHOICE

BUSINESS TRAVEL MYTHS

1. Travel for work is increasing, but so is cost-cutting

– which means business travellers are becoming

less premium consumers, opting to fly coach and

penny-pinching on fees¹… some employers are

even turning cost-saving into a game²

2. Business travelers may not have a choice in the

airlines they fly due to increasing barter deals³

and partnerships, and therefore should not

necessarily be a primary target for advertising

12 (AT LEAST WHEN WE’RE TALKING ABOUT ECONOMIST READERS)

1. USA Today, April 5, 2015: “Business travel is back, perks are not”

2. Financial Times, April 30, 2015: “Everyone’s a winner in the game to cut business travel costs”

3. Harvard Business Review, Sept 12, 2012: “The exploding business of bartering”

ACTUALLY, TRAVEL FOR BUSINESS IS STILL

SEEN AS ESSENTIAL IN MANY SITUATIONS 13 … ECONOMIST READERS STILL FLY

Q7: How do you make decisions to fly for business over alternatives such as teleconferencing, email, etc.?

THERE ARE NO

SUBSTITUTES

“Telecons are poor for large groups or

complex topics.”

FACETIME IS IMPORTANT

“Facetime with people

involved is very important. Body

language says a lot about the person; people are usually

themselves in person.”

TRAVEL PROVIDES CONTEXT

“In-person, on-site

information provides

much greater context than teleconferencing,

email, etc.”

INFLUENCE OPINIONS

“Need to meet face to face and influence

opinions.”

TRAVEL LEADS TO

ACTION

“While teleconferencing is

convenient, it adds a layer of anonymity and irresponsibility to follow

through on some decisions.”

TRAVEL MEANS “BUSINESS”

“Any serious

negotiation requires a trip.”

AND PRICE IS LESS IMPORTANT THAN

CONVENIENCE OR COMFORT

80

60 59 54 53

43

33 31 26

22 20 12 8

59

37 36 33 36 21 13

24 10 7 6 4 2

Fewer

connect.

Loyalty

programs

or points

Seat

comfort or

options

On-time

reliab.

Low price Flexible

changes

Superior

in-flight

service

In line with

req. or

restrict.

from my

employ.

Ground

offerings

Free food

/ drinks

In-flight Wi-

Fi

Wide

range of

entertain.

On-board

lounge

Positive Influences on Airline Choice (Travel for Business)

Influences Would Cause a Switch if Not Provided

14 IN ADDITION, EMPLOYER RESTRICTIONS ONLY IMPACT 1/3 OF RESPONDENTS

Q12: Which of the following positively influences your choice of airline for business travel?

Q13: Which would cause you to switch to a different airline from your preferred or usual business airline?

In fact, many Economist readers are

actually more likely to fly first/business

class for work now than before; out of

those respondents flying for work 10,

5, and 2 years ago…

… 24% are more likely now

vs. 10 years ago – prior

to the recession!


vs. 5 years ago


vs. 2 years ago

ECONOMIST READERS WHO FLY FOR

BUSINESS RETAIN FREEDOM OF CHOICE 16

Q14: How much freedom of choice do you have when selecting a flight for business? Select all of the below that apply to you.

OUT OF ECONOMIST BUSINESS TRAVELERS:

92% have at least

some choice in

airline flown

69% are not affected

by employer

restrictions at all

SUMMARY AND IMPLICATIONS

Economist business travelers remain an attractive target for advertising, despite general market trends in

the opposite direction

While there may be a general trend towards cutting costs and barter deals, Economist readers still see

a need to fly for work, and aren’t necessarily spending less than before

Price is often less important than loyalty programs, comfort, and convenience, likely due to things like

making it to a meeting on time and refreshed being more important than saving money

In fact, a quarter of respondents who traveled for business ten years ago and are still traveling now say

that they are actually more likely to travel first/business class now when flying for work

On top of that, Economist respondents tend to have at least some choice in airline – only 8% never have

a say in the airline they fly, and only 31% cite any sort of restriction – airline, class/cabin, or expense limit –

at all

17

FOCUS 2:

PREMIUM FLYERS’

GROWING IMPORTANCE

Fees and a la carte systems are becoming more popular among airlines, leading

to a greater divide between the front and back of planes. Premium consumers

are now increasingly important to airlines’ bottom lines… what do they want

from their flying experiences?

EXTRA AMENITIES DO POSITIVELY

INFLUENCE PREMIUM FLYERS 20 HOWEVER, IT IS LOYALTY PROGRAMS, (SEAT) COMFORT, AND GOOD SERVICE

THAT ARE “MANDATORY”

Q12: Which of the following positively influences your choice of airline for business/leisure travel?

Loyalty Programs

Seat comfort

Flexible changes

Service

Ground amenities

On-board lounge (long-haul)

POSITIVELY INFLUENCES

1ST OR BUSINESS CLASS

Loyalty Programs

Seat comfort

Service

CAUSES 1ST OR BUSINESS

CLASS TO SWITCH

AIRLINES

Seat comfort

Flexible changes

Employer restrictions (domestic or short-haul)

Wi-Fi (domestic or short-haul)

POSITIVELY INFLUENCES

PREMIUM ECON

Loyalty programs (domestic or short-haul)

Seat comfort

Employer restrictions

(domestic or short-haul)

Wi-Fi (domestic or short-haul)

CAUSES PREMIUM ECON

TO SWITCH AIRLINES

97% OF FRONT CABIN FLYERS*

BELONG TO A FREQUENT FLYER OR LOYALTY PROGRAM

(VS. 89% TOTAL RESPONDENTS)

* Across business and leisure travelers who have flown in the past 12 months

REGARDING LOYALTY PROGRAMS,

PRIORITY BOARDING MATTERS MORE

THAN AVERAGE TO PREMIUM FLYERS

55

70

62

72 66 67

62 60 58

Total Short-Haul

for Work: First

or Business

Long-Haul

for Work: First

or Business

Short-Haul

for Leisure:

First or

Business

Long-Haul

for Leisure:

First or

Business

Short-Haul

for Work:

Premium

Econ

Long-Haul

for Work:

Premium

Econ

Short-Haul

for Leisure:

Premium

Econ

Long-Haul

for Leisure:

Premium

Econ

% Citing Priority Boarding as a Reason to Join a

Loyalty Program

22

Q20: Which of the below would encourage you to join a particular frequent flyer/rewards program? (Select all that apply.)

HOWEVER, DESPITE PAYING MORE,

PREMIUM FLYERS STILL PREFER REWARD

POINTS BASED ON DISTANCE FLOWN

About a quarter of front cabin

leisure travelers prefer reward

points based on price paid (vs.

16% of total respondents), but half still prefer reward points based

on distance flown, and the

remainder have no preference.

23

Q21: Do you prefer it when reward or frequent flyer points are based on distance flown or price paid for the ticket?


Premium cabin consumers are increasingly important as the gap in offerings between premium cabins

and basic economy widens

While extra amenities like lounges and chauffeurs are appreciated by premium cabin flyers, it is loyalty

programs, seat comfort, and service that are “mandatory” in a customer experience

In terms of loyalty programs, reward points and upgrades are important, but it is an appreciation for

priority boarding that separates premium cabin flyers from economy flyers

Therefore, while airlines like Singapore and Emirates do offer amenities that go above and beyond the

standard, it is likely that their superior comfort and service are what drives premium cabin flyers to choose

and rate them highly

24

FOCUS 3:

INCREASING COMPETITION

AND TECHNOLOGY

Low-cost has gained market share among

both leisure and business travelers¹

In 2013, US low-cost carrier unit revenues

exceeded those of legacy carriers on

domestic routes

In Asia and the Middle East, low-cost

carriers outperform every other sector

in the industry

Low-cost carriers are growing in long-haul

as well, with airlines like Norwegian and

Wow entering the US market²

On the opposite end of the spectrum, new

premium offerings from airlines like Emirates,

Qatar, and Singapore are drawing business

away from local carriers in North America

and Europe³

THERE ARE MORE COMPETITORS IN THE

MARKET; CONSUMERS HAVE NOTICED 26

1. The Telegraph, Nov 16, 2013: “Low-cost airlines have come a long way. But who will win the battle?”

2. Skift, March 4, 2014: “Low-cost carriers continue to eat the world”

3. AdWeek, October 12, 2014: “Emirates is the world’s most glamorous airline”

“MORE COMPETITION IN MANY

ROUTES HAS LED TO BETTER VALUE

FOR MONEY FOR TRAVELERS LIKE

ME.”

– ECONOMIST

INSIGHTER

Comparison shopping is the norm, and many

savvy travelers use price history and prediction

sites to decide when to buy¹

The practice of using comparison sites is

valued at $6.7 billion a year²

Conversely, technology has helped both the

industry and consumers by increasingly

streamlining the flying process

― Smartphone interaction is on the rise, with

tablet and smartphone bookings

expected to rise to 37%, and mobile

boarding pass use expected to be the

preferred choice of 18% of passengers, by

2016³

– For more premium flyers, technology is

being used for greater personalization4

TECHNOLOGY IS MAKING THAT CHOICE

APPARENT, BUT ALSO FACILITATING THE

FLYING EXPERIENCE 27

1. LA Times, June 1, 2015: “Delta blackout makes cheap airfare game even tougher”

2. Chicago Tribune, May 22, 2015: “Study: consumers benefit from fare-comparison sites”

3. Skift, May 28, 2015: “Passengers want simpler tech solutions from airports and airlines”

4.. New York Times, March 18, 2014: “Airlines use digital technology to get even more personal”

“INTEGRATION OF…

TECHNOLOGY INTO THE PROCESS

HAS REMOVED MANY OF THE

INCONVENIENCES OF FLYING.”

– ECONOMIST

INSIGHTER

RESPONDENTS OF ALL AGES ARE

EMBRACING SMARTPHONES IN TRAVEL

80 75

41 37 40

12 9

74 71

41 40 33

17 12

68 69

31 32 28

21

6

60 60

36 34 28 27

10

40 33

22 21 16

50

2

Accessed a

boarding pass

Checked-in for a

flight

Booked a hotel

room

Booked an

airplane ticket

Reserved

transportation on

the ground

None of these Submitted an

expense

report/claim for

travel

Smartphone Usage for Travel in Past 12Mo

Under 35 35 to 44 45 to 54 55 to 64 65+

28 EXCEPT FOR 65+, BUT ESPECIALLY UNDER 35s

Q8: In the past 12 months, have you used a smartphone to perform any of the following for travelling?

HOWEVER, RESPONDENTS STILL SHOP

USING AIRLINE WEBSITES

57

40 38

26

9 6 6

75

66

17

41

17 13

1

Airline websites Travel booking /

discount sites

Human travel agent Search engines

(e.g. Google Flights)

In-person friend,

family, or colleague

recommend.

Reviews from friends

or strangers on

social media or

review sites

None of these

Used to Research, Check, or Shop Around in P12M

Business/For Work Leisure

29 EVEN IF A VARIETY OF SOURCES IS USED AND AVAILABLE

Q11: Which of the following have you used to research, check, or shop around for business/leisure flights in the past 12 months?

In fact, the vast majority – >75% – of

respondents using most other online

and offline sources (booking sites,

search engines, etc.) also use airline

websites when researching or

shopping for business or leisure tickets.


AGE HAS AN IMPACT ON RESEARCH

AND SHOPPING SOURCES 31


IN GENERAL, THE OLDER THE

BUSINESS TRAVELER, THE MORE

TRADITIONAL HIS/HER SOURCES

IN LEISURE TRAVEL, MILLENNIALS

ARE MOST LIKELY TO

COMPARISON SHOP ONLINE, BUT

ALSO CONSULT ADS AND FRIENDS

A SUBSET OF LEISURE TRAVELERS

ARE VERY INVOLVED IN

RESEARCH, AND USE A WIDE

RANGE OF SOURCES

ECONOMIST READERS KNOW AND/OR

LIKE SOME LOW-COST BRANDS AS

MUCH AS TOP LEGACY CARRIERS

BA

Southwest

easyJet

United American

Lufthansa

Delta

KLM

Air France

Ryanair

JetBlue

Swissair

Singapore

Jetstar Airways

Cathay Pacific

Air Canada

Qantas

Emirates

Air Asia Iberia

Turkish

JAL ANA

Air China

Spirit Airlines

Korean Air LAN

Aeroflot

China Eastern

China Southern

Asiana

-5

5

15

25

35

45

50 60 70 80 90 100

Familiarity vs. Favorability Size of bubble = % Flown

Origin = Average Familiarity/Favorability

32

% Flown or Familiar With (Top 3 Box)

%

Lik

e o

r P

refe

r

IN FACT, SOUTHWEST SCORES VERY

WELL, ALTHOUGH CARRIERS WITH ULTRA-

PREMIUM OFFERINGS ARE MOST LIKED

BA

Southwest

easyJet

United

Lufthansa

Delta KLM

Air France

JetBlue

Swissair

Singapore

Cathay Pacific

Qantas

Emirates

15

20

25

30

35

40

45

50

90 92 94 96 98 100 102 104

Familiarity vs. Favorability (Well-Known and Liked) (Size of bubble = % Flown)

33

%

Lik

e o

r P

refe

r

% Flown or Familiar With (Top 3 Box)


Technology is a double-edged sword for legacy airlines – while it has allowed for greater convenience

and streamlining, it has also made competition fiercer

Economist readers seem to have adopted technology and smartphone usage in travel to a high degree

They reported high levels of comparison shopping both online and offline; however, the vast majority of

older respondents use airline branded websites as a research or shopping tool in conjunction with other

sources, and there is a subset of (likely younger) respondents who check a wide range of sources listed

As a result Economist readers are well aware of new entrants to the market – many low-cost carriers rival

legacy carriers in familiarity, and non-Western airlines Singapore and Emirates top the charts in

favorability

– Low-cost airline Southwest also enjoys high levels of favorability… higher than all other US airlines

listed in the survey

34

airline category survey - economist group...1. usa today, april 5, 2015: “business travel is back,...

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