After 105 years of commercial aviation (including buzzing the beach to land in St. Maarten), airlines are the definition of a boom or bust industry. In recent years, low oil prices, a strong economy and favorable labor contracts have helped unleash robust profitability.
What has been their secret to success? For U.S. global heavyweights – Delta, American and United, it’s a strategic focus on those who matter most. Specifically, high value and frequent business travelers.
Even Southwest, the industry’s most consistently profitable airline for 45 years, has undergone a strategic shift as they aggressively compete for business travel.
According to American Airlines, business travelers represent just 13% of their total passengers, while delivering 50% of the revenue. As a result, business travelers generate 6.7 times more revenue than leisure passengers who fly the airline just once per year and see travel as a commodity.
Over the last few years, basic economy has gone bare bones as carriers have realized they aren’t competing with each other (in this tier of seats) for passengers who expect top notch service. Rather, they are competing with low cost carriers like Allegiant, Frontier and Spirit, where you pay a la carte for everything beyond the bare minimum.
Not All Passengers (or Listeners) Are Created Equal
Business travelers spend more and travel more often. Same is true for your heavy listeners. They consistently deliver more occasions and TSL. It’s not simply about executing on-air strategies that keep them listening longer. By definition they have more time to give and come back more often. The key to ratings and revenue is for your brand to win more of these occasions from the heavies.
For airlines, it’s why frequent flyer programs are such an important part of their strategy. In fact earlier this year, American Surprised & Delighted their Concierge Key members with gifts allowing them to say thank you in a unique and personal way.
Earning and keeping frequent flyer status is so important that Delta just made headlines with Reclaim My Status allowing elite customers to keep their Medallion status despite a downturn in travel following a life event.
Hold onto your flotation device, because according to Delta, “We’re always looking for new ways to take care of our customers and that includes injecting even more empathy into travel … Loyalty goes both ways.”
Speaking of empathy and focusing on what matters most to business travelers, Delta is also currently testing free wi-fi on its flights.
Like audio, aviation has grown exponentially in recent years with more than 42,000 cities around the world being connected by a direct flight. More than double the number from 20 years ago. Meanwhile, passenger counts have also increased from 1.5 billion to 4 billion annually.
Yet, by focusing on the few who matter most (business travelers who spend more and fly more often), legacy carriers are consistently generating billions in annual profits, despite increased low cost competition and online booking sites that help passengers find the lowest cost flights.
As you know from your own recent travels, flights have never been so full.
Delta’s Reclaim My Status initiative is a great reminder of the upcoming changes in PUMM levels as the school year comes to an end.
Who are your most important working parents and what’s your strategy to interact with them directly off-air this summer? With school out, their listening patterns will predictably change, despite no loss of affinity for your station or Nielsen doing anything wrong.
It’s not just the end of the school year or the Christmas season that changes listening habits. Life events can happen at any time. One of our clients recently received a comment from a loyal listener in their database who mentioned a death in the family, which caused them to drop everything for a couple of weeks, including listening to the radio.
As life returned to normal, they started listening again and reached out to let the station know how nice it was to hear their favorite personalities again and how much they missed the connection. The sympathy card this listener is about to receive from the station will certainly be prominently displayed all summer, not to mention the conversations it will create about the station with family, friends and co-workers. Safe to say, our client will be the only brand sending a sympathy card.
In the immortal words of Delta Airlines, “Loyalty goes both ways.”
For its part, American isn’t worried about trying to super-serve the equivalent of their cume – the 87% of passengers who fly only once per year.
Their efforts are focused on the heavies who provide a disproportionate impact.
For radio, heavy listeners deliver on average 4x the occasions and TSL as light listeners. As a result, it’s another reminder that not all listeners (or airline passengers) are created equal.
In fact, merely capturing audience data is easy. It’s about building relationships and using data analytics to identify those who matter most today, so you can increase their occasions, while deploying a strategy to cultivate more heavy listeners including the ones you’ll need tomorrow to continue driving ratings and revenue.
– Andrew Curran, President and COO