"Airlines Face Dilemma: Low Prices or Quality?"

Wednesday, October 2, 2002                         
 
Airlines Face Dilemma: Low Prices or Quality?
By ERIN WHITE 
THE WALL STREET JOURNAL


LONDON -- It is a classic marketing problem: What is an established
company to do when a low-price upstart pounces on its customers?

Touting slashed prices can make a venerable brand look cheap. On the
other hand, not addressing a competitor's prices can cost an older
company customers or make it look out of touch. That is the dilemma
facing traditional airlines around the world as discount carriers
proliferate. The airlines also have the added burden of a world-wide
travel slump. "It's very difficult to strike the right balance between a
quality brand offering and cheap prices," says Rita Clifton, chairman of
Interbrand, a brand consulting firm owned by Omnicom Group Inc. of the
U.S.

Several airlines are rolling out advertising campaigns now that take
different approaches. British Airways is running ads that hammer home
low prices. Others have chosen a more subtle service push. Delta Air
Lines in the U.S., for example, is talking about service in new ads that
promote changes designed to get people through the airport more quickly.
Similarly, Air France is planning a campaign that emphasizes top-tier
service.

Advertising for British Airways has traditionally played on its classy
image as "the world's favourite airline." Recently, it has launched ads
in Europe and the U.S. that emphasize price. In Europe, billboards show
an oversized number. It's the fare to a particular destination, which is
written in smaller letters on the price tag.

The tagline says: "Have you seen how small our prices are?" TV spots in
the United Kingdom feature street scenes in which the billboard ads
emerge from the background. The tagline is the same.

In the U.S. last month, British Airways ran a price-led ad campaign
aimed at leisure travelers. Newspaper ads touted low prices and also
played on the airline's role in the forthcoming James Bond movie, "Die
Another Day," in which Mr. Bond flies British Airways. A recent New York
newspaper ad, for example, promoted several low fares: "London $139.
Amsterdam $193. Paris $193. Barcelona $228." (The fares are one-way
based on purchasing a round trip flight from New York-area airports.)
The text said: "Unlike James Bond, you may not be able to save the
world, but at least you can save money seeing it with our great offers
to Europe."

"What we need to do at BA is to reinforce to our customers that now we
have changed our pricing," says Jayne O'Brien, general manager for U.K.
and Ireland marketing. "Consumers already have in their mind a lot of
the value-added messages about BA -- they know we have lots of customer
service, more flights, more planes."

Ms. O'Brien says British Airways made a point to keep the ads
classy-looking. Its low-cost competitors' ads, for instance, often use
loud colors. The new BA ads use the company's signature dignified
midnight blue. The commercials have a calm, understated feel. "The price
messages have been done in a very BA way," Ms. O'Brien asserts.

British Airways has retained its service-thrust for business travel ads
in the U.S. During U.S. coverage of the Ryder Cup this past weekend,
British Airways introduced a commercial promoting its business-class
bed. A man goes into New York's Times Square at night, lies down on a
comfy-looking bed, and all the lights in Times Square turn out as he
falls asleep. The next morning he wakes up, well-rested, in London's
Piccadilly Circus.

Also in the U.S., Delta recently launched a campaign to promote new
efforts to speed the airport check-in process. At New York's busy La
Guardia Airport, for instance, Delta is adding telephone banks that
customers can use to check in for a flight, select or change seats, ask
for an upgrade and change flights. Delta is also doubling the number of
self-service check-in kiosks to 24 from 12.

The ads, created by Leo Burnett, a unit of France's Publicis Groupe SA,
carry the tagline "Hate Lines?" The ads show the name "Delta Air Lines"
with "lines" scratched out. Text on a print ad elaborates: "Nobody likes
lines. That's why at Delta, we're doing everything we can to help you
see less of them." Posters appear in places where people wait in line,
such as bus depots and movie theaters. The campaign runs through
December.


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