Jetstar on Virgin Blue - Perils of in-flight TV

In flight TV is all the rage with Low Cost Carriers because it opens up a revenue stream without the complexity of managing a video on demand system. Unfortunately streaming live TV comes with a lack of editorial control. Here is a photo of me watching a Jetstar TV advertisement while sitting in a Virgin Blue seat somewhere between Sydney and Melbourne. That is 192 people looking at your competitor's brand while consuming your product.

Lies, damn lies and statistics about Jetstar

I hate it when Airlines use statistics to tell bald-faced lies and make themselves sound more successful they they deserve to sound. I hate it at a purest marketing level and also because it helps perpetuate consumer mistrust of travel companies.

I came across a piece on TravelWeekly (AU) titled "Jetstar edges out rivals in share battle". Summary of the piece is that the Qantas owned Jetstar is now ahead of Singapore Airlines and Air New Zealand in Australia in term of international market share. This (in theory) puts Jetstar in the number two international carrier spot behind Qantas. Jetstar's share (according to the article) is 9% of the international market in May up from 6.1% the previous year. But over the same period Qantas' share dropped from 26.2% to 22.4%. A large part of the drop in Qantas is because Jetstar flights replaced Qantas flights. A simple carrier for carrier switch by the parent company. Clearly the near 3% lift in Jetstar numbers was helped by the near 4% drop in Qantas carriage share. Jetstar CEO Bruce Buchanan (in his press release on this story) clearly attributes the results to the performance of the airline and does not credit being given free traffic and passengers by Qantas. By "free customers" I mean customers they did not have to earn by marketing to and beating a rival to acquire.

At a conference last year a Jetstar rep put up a graph showing the domestic number passengers that Jetstar was carrying per month since its launch in 2004 and compared that to the number of passengers that Ryanair was carrying four years after its launch. On that comparison Jetstar was way ahead of Ryanair, the clear implication being that Jetstar is a better LCC that Ryanair at this stage of their development. They supplement this on their website by praising themselves for winning awards such as the "Top 5 Carriers for Passenger Growth 2009" award.

However just like international it is unambiguous that Jetstar owe more of their domestic passenger growth to the huge amounts of "free" traffic/passengers they were given from Qantas routes being handed over to Jetstar than to any creative marketing or pricing on Jetstar's part. In fact I would argue that a number of their marketing campaigns would do more to turn customers off the airline rather than on. Whereas Ryanair had to steal/lure away each customer from BA, easyjet, Aer Lingus, Jetstar simply had to wait for the customers to turn up looking for a red rat tail and then resign themselves to being served by people dressed in grey and orange.

I am not arguing that Jetstar is a bad airline. They have a much more enjoyable product offering than Ryanair and other LCCs I have flown. But to celebrate this growth as if they had started from a zero base (like Raynair and Virgin Blue) is disingenuous to say the least.

Am I being too tough of Jetstar? What do you think?

Thanks to StarvingFox at flickr for the photo

Travel industry vs the Appliance Industry: round 2

I ran a post earlier in the week from TRAVELtech about the emerging battle for discretionary dollars between the travel industry and the appliance/consumer products industry. With travel being difficult to do, consumers are considering giving their money to TV makers over Airline companies and hoteliers. Through some tips from insiders and a bit of digging around I have found some evidence to prove this theory.

First some research from Tourism Research Australia (the research arm of Tourism Australia). Their 2007 report "Changing Consumer Behaviour" (pdf) blamed a drop in domestic travel spend in Australia in part on the increasing share of discretionary spend going to consumer goods. Here is how they put it

"the increasing competition for share of wallet and of time, the industry may need to accept that domestic travel is unlikely to return to historically high levels....‘spending patterns and the benefits derived from it vary across the generations, although there are some constants: technology, cars and furniture...Generally those who are younger or more under pressure spend more on compensatory items to make them feel better about life. These tend to deliver instant gratification in a way that travel cannot."

Lots of bureaucratic speak for people a buying bigger and flasher TVs, cutting into their travel spend.

Secondly there is a marketing example. Jetstar (low cost carrier offshoot of Qantas and previous winners of the BOOT "worst marketing idea of the week award"). Have teamed up with a large Australia consumer goods retailer called the Good Guys to give an appliance to one passenger on every flight between now and Nov 5. The hope being to convince customers that they can have their TV and beat it all at the same time.
Prizes range from a blender to a plasma screen though it is unclear from the T&Cs how to know which one is up from grabs in a particular flight.

Either way we have marketing and research evidence of this new battle front for the travel industry.

Jetstar promotion - if you do this, this, this, that and pay more then we'll do something for you

Jetstar is Australia's third domestic carrier - the low cost off shoot of Qantas. They were launched a few years back by Qantas to fight the increasing market share gains of Virgin Blue. While Virgin Blue have broken a number of the low cost carrier rules with lounges, flexible tickets, fixed seating and more, Jetstar has proven itself to be an old fashion low cost carrier with no arranged seating and flying to secondary airports (who even knew Australia had secondary airports). Virgin Blue have been doing as much to fight Qantas at the top of the market with service as they have to fight Jetstar at the bottom with prince. It has found DJ (Virgin Blue two letter code) stuck in the middle.

To continue the squeeze and prove their pedigree in the price competition, Jetstar have launched a new fare guarantee campaign. They guarantee to double the difference if you find a lower fare. Great idea for a campaign - right? Should generate good press and help build up the price credibility story- right? It would, except in a classic low cost carrier move (and Qantas move for that matter) the terms and conditions are so rigorous and ridiculous that it is more likely to annoy customers, than win them over.

This is what you have to do to claim your "double the difference"

1. Find the lower fare
2. Call the Jetstar call centre - making sure there is availability in the competitors fare and ONLY ONE CLASS of Jetstar fare
3. Departure of the lower fare must be within one hour of departure of the compared Jetstar fare
4. Wait for Jetstar to verify
5. BOOK THE MORE EXPENSIVE FARE WITH JETSTAR
   
6. Then A VOUCHER voucher for a subsequent purchase will be sent for double the difference VALID FOR ONLY SIX MONTHS.
   

Who the hell in the marketing department thought this would be a good deal for customers. You have jump through a series of hoops to prove that Jetstar is more expensive, then you actually have to buy a more expensive ticket to get vouchers that have a very limited time of validity. Jetstar can avoid liability by simply closing out a class of fare. Price guarantees are simple - find a more expensive fare and we'll match it or give you x% off. Easy. When you make marketing promises that are complicated and painful for consumers they will inevitably have the opposite effect by generating bad experiences and word of mouth.