Guest post: Should the travel industry cut its race to the bottom short?

Businesses today deal with fearless consumers. Where previously brands enjoyed a relatively benign marketplace, gone are the days of customers being blissfully unaware that they could – and should – shop around, compare, and expect more. Continue reading →

Hugo Burge, CEO of Momondo Group.

Businesses today deal with fearless consumers. Where previously brands enjoyed a relatively benign marketplace, gone are the days of customers being blissfully unaware that they could – and should – shop around, compare, and expect more.

In a hyper-competitive landscape, brands must work harder to stand out, to build the kind of trust that is the backbone of long-term loyalty. For many, that’s ultimately led to an exclusive focus on price.

That trend has driven unprecedented change in the travel sector over the last two decades, where the explosion of digital and the meteoric rise of the low cost, no-frills model have completely altered the landscape.

In many ways, these have been a force for good, and served to democratise travel. They’ve also helped us to grow our two globally recognised brands, Cheapflights and Momondo; feeding our mission to open the world by helping people to search for and book good value travel online quickly and easily.

Recently though, we’ve seen examples of how the forces of price and popularity are pushing the boundaries in our sector even further, with Norwegian Air and Air Asia both launching ultra-low cost flights across the Atlantic or Pacific, and other carriers, like Wow, aggressively pursuing the long haul, budget-conscious flier.

This is undoubtedly positive news in many ways – offering more choice to price-sensitive consumers, increasing competition, and forcing innovation in established business models.

It remains to be seen how the legacy carriers respond to these disruptive influences, but the trajectory of change in short haul suggest that where the young guns go, the old guard are eventually forced to follow. IAG has just succumbed to the inevitable and announced an intention to launch its own low-cost, long haul brand this year. If you can’t beat them, right?

What it says to me, though, is that we’re approaching the point at which this singular focus on price is posing a risk to brands – where a race to the bottom risks the top caving in.
It is only by substantially reducing in the kind of overheads airlines used to have to carry to market, sell and operate their services that the kind of fares offered by Norwegian and Air Asia are possible.

Improvements in aviation efficiency is partly responsible, but where the red pen has been wielded most freely is in the passenger experience – with the gradual erosion, or commoditisation, of the touch points passengers used to take for granted, and which either drove or strengthened their love for – and loyalty to – that brand.

I’m a fan of Norwegian, both the story and the product. In my experience, they offer an impressive quality of service on their pan-European flights for a relatively low fare. But will this experience translate to a transatlantic journey? I’m not so sure it can without fundamentally compromising the passenger experience.

Tangible examples of this are not hard to find either. In January, American Airlines decided not to install seat-back monitors on its new fleet of aircraft, leaving passengers without in-flight entertainment unless they pay for an upgrade. Meanwhile, British Airways sinister-sounding ‘densification programme’ hit the headlines for sacrificing legroom for extra seats.

Price will always be critical in the fiercely competitive aviation market and understandably so. But is ultra-commoditisation adding or removing value elsewhere?

Consumers want to feel like businesses understand them, and see this replicated in how they engage with them through their product and service offering. Brands need to do more, not less, to part people with their cash and keep them coming back for more.

For us, this starts with an approach to product where form drives function – a continual dialogue between the UX of our products and the commercial imperative of monetising every visit.

The former should never be sacrificed for the latter though, and whether it is a website, an app or an airline cabin, it’s essential that our industry is focused first and foremost on creating products users love. Even Ryanair has seen the light with that one.

Travelling halfway around the world for peanuts makes sense in a model where you have to provide your own entertainment or pay for overhead baggage space, but is that enough when the experience itself is the victim?

The impact of low-cost travel over the past two decades has been immense, but the sector must work hard to ensure that we don’t devalue the unprecedented privilege and experience of travelling itself.