Price competition likely in ‘scramble’ for travellers as grip on loyalty loosens

Price competition likely in ‘scramble’ for travellers as grip on loyalty loosens

Airlines will need to focus on attracting new and return clients as the world emerges from the Covid crisis, with loyalty initiatives likely to take a back seat initially, according to a speaker at the virtual CAPA Live event this week.

Brent Coker, consumer psychologist at the University of Melbourne, is also predicting ‘a scramble to grab consumers’ through price competition as the world moves back towards international travel.

‘When an industry wakes up again, what tends to happen is that all the brands start scrambling for the consumers, which leads to everyone competing on price. This is not ideal, and it is something that marketers dislike intensely,’ he told the international audience at the CAPA – Centre for Aviation webinar.

‘It is the opposite of marketing, where we want to build our services, our offerings and our value based on ‘premium-ness’ so that we can extract more profit out of consumers. Then, in the long term, we start focusing on loyalty.’

Coker says the classic segmentation for the airline industry consists of those consumers that have never flown, the lapsed flyers, light flyers, medium flyers and heavy flyers.

‘Associated marketing campaigns (aim) to attract and capture each of these categories through either attraction or loyalty initiatives. What tends to happen over time, however, is because the industry has been asleep for so long, we lose our grip on loyalty. So marketing needs to shift back towards attraction initiatives. There are no more medium or heavy flyers. There are very few light flyers – perhaps heavy flyers are now light flyers. What happens over time, is that when people haven’t been using a brand, out of choice or because they were forced to, they start to reconsider their options of what is available out there. So attraction initiatives are important.’

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