It felt like a delayed reaction. Some 18 months ago Lufthansa, United Airlines, Air Canada, SAS and Thai International, later joined by Varig, jumped feet first into the branding game and founded the Star Alliance. In late September oneworld, hindered by regulatory opposition to an alliance with American and British Airways at its core, finally followed suit. The rival groupings led by KLM/ Alitalia/Northwest/ Continental and Swissair/Delta then retired hastily behind closed doors to debate whether they too should "get a name". In the case of Delta/Swissair, a new branding exercise would amount to a relaunch of the Atlantic Excellence alliance.
The outcome of this frantic activity will unravel in the coming months. Continental chairman Gordon Bethune's rash suggestion that Continental's tieup with partners KLM/Alitalia/ Northwest be baptised "wings", has precipitated heated, intensely private debates between those carriers. But KLM's brand manager, Rosa Zeegers, denies that the carriers have fallen behind Star and oneworld. Zeegers points out that KLM/Northwest was the first real transatlantic alliance and already has seamless products. "We still believe that we are far ahead and the only alliance that can build on products already in the marketplace."
Zeegers is unmoved by the launch of the oneworld name, but admits that KLM and some of its other partners are also "very close to reaching an agreement on a name and logo". "There is always a sense of urgency but for KLM/Northwest this is no strategy, it's reality. I do not think that because they suddenly have a name we should have a greater sense of urgency," she adds.
While KLM and its partners are still "very far" from defining a common service concept, Zeegers says a common brand will include some of the core values of the existing brands. KLM's "reliability" motto, which embodies the concepts of safety, punctuality and responsible behaviour, overlaps with the values of its partners' brands and will be used within a common brand, she says.
The Delta Air Lines/ Swissair-Qualiflier alliance grouping is less than half the size of Star and oneworld in revenue terms. Swissair's Qualifyer group includes Sabena, Turkish Airlines, TAP Air Portugal, Austrian Airlines and AOM of France, but there are no immediate plans for a single brand name to link this to Atlantic Excellence, says the SAirGroup, which admits Swissair's strategy is under review but says that the carrier is further ahead than Star and oneworld. The core values of Swissair's alliances are quality and customer orientation, she adds.
Meanwhile, those who have a more recently launched common brand remain cautious over their future plans. Star believes its year and a half of existence means its brand is ready for the next step up. In contrast oneworld is frantically preparing for a full launch in early 1999.
The stakes involved are high so their caginess is hardly surprising. "You only have two things as a business - brand and customers - and if you don't manage those then you have problems. If you realise that you will start to change your priorities," says Keith Yates, chairman and chief executive of Performa International, which specialises in service design and training. Airlines cannot expect to build massive global alliances without having to manage the impact on the individual airline brands.
Since its launch in May 1997, Star Alliance has been treading a fine line between the dual development of the global Star brand and its six individual members' brands. Indepth customer research has shown that, for now, "customers have no interest in us losing our individual brands, identities, customs and service differentiators", says Rupert Duchesne, vice- president marketing at Air Canada. Passengers want access to a single global network with as much seamlessness as possible, and worldwide status and recognition from all the partner airlines. "The best way to achieve that is with an overarching brand," says Duchesne.
At the same time clear communication has been used to avoid unrealistic customer expectations. "You very clearly delineate to the passenger what you are providing and what you are not," says Duchesne.
So far, says Duchesne, "we have taken the easier measures - everything else will take more effort and investment." Among the perceived successes so far, he lists a "pretty comprehensive global network", the ability to earn and burn miles on all the existing partners' services, lounge access and frequent flier benefits such as priority check-in and waitlisting. "A lot of these were quite significant programming challenges," he adds.
Seamless service - ease of connection and a similar travel process between partners - is being introduced gradually. "It would be ludicrous for any alliance to say they can deliver that on day one but we made sure any benefits we offered were available alliance-wide," says Duchesne. The partners are sharing terminals wherever possible and there is now Star Alliance signage at the top 35 alliance airports worldwide. Key ticket offices are also being merged.
But should Star become a stronger brand in its own right by promoting a set of common, core values or a more consistent service and product? According to Duchesne, the first of many quarterly customer surveys across the alliance has not shown core values to be an issue. Nor has there been any sign of dissatisfaction from passengers flying on other partner airlines, he adds. "On the whole the customer's perception of the quality of the other airlines is within a couple of points of their perception of their own airline," says Duchesne.
One reason may be the rigourous standards that have to be met by would-be Star members. While Star has no intention of instituting commonality of product, it does have a set of standards with regard to the quality of seating, pitch and basic amenities, which must be met before a carrier can become a full member.
All Nippon Airways, due to become a full member in October 1999, also has to put in place the system links needed to provide Star premium passengers with facilities like priority waitlisting and lounge access. "It takes almost a year for a typical airline to come up to the Star standards," says Duchesne.
While, according to Star, passengers are not asking for common products or stronger core values, the feedback from them is being used by Star to identify each carrier's main strengths. Air Canada, for example, is ranked highly for its inflight entertainment and its seat comfort on short-haul sectors. This could feed through to common purchasing decisions, says Duchesne. "Where it makes sense from a cost point of view, there will be more commonality," he explains. And if the gap between passenger perceptions of the different partners does widen significantly, this will be analysed, he adds.
In some instances more commonality can be the best answer, however. Northwest and KLM launched a joint intercontinental business class - World Business Class - five years ago. The product is consistent with regard to seat comfort, pitch and food and inflight entertainment, says KLM's Zeegers. The food has the same quality throughout both carriers and training has been given to ensure passengers of different nationalities are sensitively handled by both carriers.
World Business Class came about when KLM wanted to abolish first class and upgrade its business class just when Northwest's product life cycle was also at the right point for an upgrade. Zeegers says the product has been very successful but hastens to add that this does not mean the two carriers will do all future product upgrades together. "I think that it would be desirable in the marketplace but, from a managerial and strategic point of view, it would have to be established case by case," she says.
Star remains confident that the quarterly passenger research will guide it in the right direction. "We have done a lot by hunch. Now we will have some kind of yardstick against which to judge ourselves," says Duchesne.
The Star brand will remain a sub brand in its members' home markets for the forseeable future. "I would hate to see us losing our individual identity; that would be the best way to throw away our home market customers," says Duchesne. Within three to five years, however, Duchesne believes Star will become the lead brand in third country markets where joint Star facilities will become the norm.
Star's main goals include completing the global network and through check-in from any airport in the world within three years. "Any carrier should be able to know as much about the passenger as the booking carrier did", says Duchesne. Co-locating the partners wherever feasible in the world will probably take another five to 10 years, he adds. Elements such as baggage reclaim privileges in the award and recognition area will also be improved, and some "small bells and whistles" will be added as the partners work towards one, consistent, frequent flier plan. Other challenges include IT changes to enable the partners' reservation and inventory systems to talk to one another. "More than half of the 1999 Star Alliance budget will be directed towards developing IT solutions," says Duchesne.
As Star steams ahead in its quest for stronger brand identity, oneworld is carrying out a mammouth exercise to train staff ready for a full launch early next year.
With the alliance in its infancy, its partners, British Airways, American, Canadian Airlines, Qantas and Cathay Pacific, are understandably careful not to reveal too much. But passenger research has led to some core values for the alliance. These include greater ease of travel and consistency in offering seamless transfers, frequent flier points and benefits and customer service support, says Peter Buecking, sales director at Cathay Pacific. Buecking adds that the aim is to make life easier for passengers, not to confuse them, while enhancing each individual airline's brand.
British Airways' senior manager business brands alliances and brand management, Jayne O'Brien, develops this theme. "Oneworld is about market quality and what a group of strong, quality airlines can do better for the customer," she summarises. Like Buecking, she stresses that BA and the other brands will remain intact for the time being. "Oneworld was launched to complement BA, as another reason why the customer should buy BA. It is another subbrand that links us to our global strategy," she says.
O'Brien believes the global super brand is at least five to 10 years away and will only evolve if customers want it. "If customers preferred one brand we would look at that," says O'Brien. In the meantime, like Star's Duchesne, she believes there may be more product harmonisation. Qantas uses the BA first class bed and another version of the Club World seat, and passengers might want it across the alliance, she explains.
At BA customer research over two and a half years showed that customers were "still very much confused about what alliances meant for them," says O'Brien. As a result "oneworld's statement of intent was that we would be customer-focused. To deliver this customer expectations must be managed: "We did not want to overpromise and then disappoint," she says.
While remaining deliberately vague on the details, O'Brien says there will be "very tangible customer benefits in areas where customers told us there were concerns". Alliance-level customer support will mean "any staff will be able to help any customer. They will own the problem," she says.
O'Brien says that none of the incremental benefits to the customer planned by oneworld fall within the regulatory sphere. Early signs that the US may block limited codesharing between American and BA without a US-UK open skies agreement will not hinder oneworld, she claims. "Oneworld does not drive codeshare," she says.
The real challenge for oneworld lies in training its 200,000 staff worldwide to deliver consistent service and customer support across the alliance. Star may have a headstart, but oneworld is pumping massive resources into a training operation which, if successful, will enable it to make up lost ground. "We know exactly what we want to do and the training is frantically being done now," says O'Brien.
According to O'Brien, this massive exercise, due for completion by 1 February, will train staff to deal with customers from the other airlines. She adds that the announcement of oneworld was timed "so that we could start the training".
At the heart of the programme is a set of core messages agreed by the partners, around which can be wrapped each carrier's individual needs and style, O'Brien explains. These core messages include recognising people as individuals and respect for individuals, while celebrating the different cultures and atmospheres between the airlines, says BA. Training focuses on frequent fliers but recognises the customer on the basis of travel rather than the cabin class in which they are travelling, she says. Line trainers are being trained in each of the partner home countries and each employee group is being trained in turn.
Significantly, there is scepticism at other alliances over whether any amount of training can deliver a completely consistent product. "No airline is able to deliver consistency throughout its own product throughout the year and it is even more difficult in an alliance," says KLM's Zeegers. Consistency of reward and recognition poses a similar challenge, she says.
KLM and Northwest have used extensive trainings to deliver World Business Class, but to date training has not dominated the Star Alliance. "The evidence suggests that we need to do more, and continuously. There will be more joint training in 1999," says Duchesne. However he refutes the need to emulate oneworld: "BA and American have got to do in three to four months what we have achieved in two years," he says.
The coming months will be worth watching as each of the major alliances works to build its own potential global super brand.
Source: Airline Business
