Wednesday, January 9, 2013

Jet’s brand journey

Despite holding pole position in the Indian aviation industry, Jet Airways was known for its apathy towards branding and marketing. 4Ps B&M does a snapshot seat-of-the-pants recap of Jet’s brand journey and the new branding move by Goyal to combine low cost carrier operations under JetKonnect

To repair the damage caused to its brand, the airline, for the first time in more than a decade of operations, came out with a television advertisement campaign to lure premium fliers. The campaign featured Bollywood hearthrob Shahrukh Khan drooling over the luxuries offered by the airline’s first class and premium class cabins. By a strange logic, the airline, long after it discontinued the campaign for its premium class customers, has inexplicably kept itself away from any fresh, new campaigns. Either its 2009 campaign did not accrue enough customers or the airline simply does not believe in advertising. But since then it has not come out with any new television ad campaign.

What appears even more paradoxical is that the airline has actually pared down its communications spend by 21.3% from Rs 51.2 crore in 2010 to Rs 40.25 crore in FY2011. All the while, new entrants such as IndiGo and SpiceJet laid out big budgets for marketing and advertising spends. While SpiceJet doubled its ad spend from 2% of its turnover to 5% in 2009, IndiGo too rolled out its first TV commercial showcasing its smooth operations and attentive service, despite being a low-cost carrier. Considering that 70% of the Indian aviation industry belongs to the low cost carriers, to compete with the established market players, Jet airways needs to get serious about its marketing plans and promotional activities.

Advertising may not come cheap but it does help to boost brand value and helps to connect more strongly with customers. A case in point is the Richard Branson promoted Virgin Atlantic Airlines. In 2009, it suffered its worst year ever, financially reporting a pre-tax loss of 158 million pounds. However, instead of cutting its ad spends, the airline nearly doubled its media expenditure from 6 million pounds to 10 million pounds in a bid to capture newer markets as well as to regain its lost sheen in the existing markets. At the end of the financial year 2010-11, the carrier had returned to black, generating a profit of 18.5 million pounds before taxes. Similarly, British Airlines too spends big bucks on advertising and is splurging to the tune of 40 million pounds to sponsor London Olympics 2012. Over and above this, the airline plans to unleash an advertising blitz to promote its brand before and during the international games.

The effect of not having a focused advertising campaign is obvious in the way the market share of Jet Airways tumbled to 25.4% in 2009 (post the Air Sahara acquisition) from 31.2% in 2006, which after taking Air Sahara’s share into account, adds up to 40% of the market. While the decline inadvertently takes into account the influx of new players in the market, Jet’s complete inability to ward off competition caused the weakening of its brand value and nearly cost the airline its market leadership position. Low-cost airline IndiGo, in the same time span, increased its share ten-fold from 1.3% to 13.9%, while SpiceJet grew from 6.9% to 12.4%. In contrast, Jet suffered a cumulative loss of around Rs.11,000 crore between 2007 and 2009 dealing a direct blow to its brand value. It’s a no-brainer clearly that the fall in operating margins of an airline will definitely lead to an erosion of its brand value over time.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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