Flying high on ads5 min read . Updated: 28 May 2007, 02:11 PM IST
Flying high on ads
Flying high on ads
After Jet Airways (India) Ltd acquired Sahara Airlines Ltd last month, the proud airline sponsored a billboard, set against Mumbai skies which announced “We’ve changed", in big, bold letters. Rival Kingfisher Airlines Ltd placed a larger billboard, immediately above, and in the same font, saying “We made them change!"
While early entrants included Jet Airways and Air Sahara, since 2003 seven new players have joined in. A sea change from the days of monopoly of the national carrier, Indian Airlines. The industry has been enjoying a phenomenal rate of growth and, according to the Centre of Asia Pacific Aviation (CAPA), the current turnover of India’s domestic airlines is $4.75 billion.
The growth trajectory is balanced on a spiralling demand. In 2006, domestic airlines carried 32.172 million passengers compared with 22.788 million in 2005—a jump of 41%. But even this growth does not match the added capacity of seven new airlines. According to the CAPA, the Indian industry is currently flying with 15% excess capacity. Adding to the clutter in the sector is the competition. The low-budget airlines have made the competition more “blatant", says a report by Federation of Indian Chambers of Commerce and Industry and PricewaterhouseCooper.
While more small players are taking to the Indian skies, mega moves towards consolidation are under way, too. The last quarter has seen a giant merger, an even greater acquisition and a quick pullout. State-owned airline Air India is in the process of merging with Indian (previously known as Indian Airlines).
Last month, Jet Airways acquired Air Sahara, now renamed JetLite, for Rs1,450 crore, even as a small airline, Indus Air, promoted by Mohan Meakins, pulled out within a few months of its launch. Such hectic activity has made it necessary for airlines to enhance their visibility.
“Now, there is a strong dependence on media for airlines to build their brand," says Girish Nair, deputy general manager, brand communications, Jet Airways, an airline that has been around since 1993. “Earlier, the brand was built more on product deliveries and actual experience rather than traditional tools of advertising and marketing," Nair adds.
The country’s oldest airline, Air India, agrees that the boom has forced a fresh look at advertising and marketing strategies for both the established players and the newcomers. “Earlier, advertisements were based on simple messages such as announcement of new destinations, on-board food festivals and corporate messages," said S. Venkat, executive director, Air India. “Currently, more emphasis is given to technical features of the aircraft like flat beds, non-stop operations, marketing schemes, etc," he says. Their advertising budget, which was in the range of Rs6-8 crore, has in the past three years been growing annually at 50%. Plus, the merger plans with Indian include a Rs75 crore re-branding campaign.
“In 2007, advertising and marketing spends for the airline industry are estimated to be at least Rs450-500 crore," says Ravi Kiran, CEO, Southeast Asia, Starcom Worldwide, a media communications agency, with Jet Airways as one of its clients. “The growth rate we are seeing here is phenomenal, with airline advertising spends increasing by 15% in 2006 over 2005, and for this year it is estimated to grow at 35%," he says.
Of this Rs500 crore, Jet Airways is likely to have the fattest chunk. It spent Rs100 crore in 2006, followed by Kingfisher Airlines at Rs70 crore. “The accounts for the two leading ad spenders are seeing a 75% increase year-on-year," says a marketing professional. Ad budgets for the remaining airlines fall in the Rs15-20 crore range. According to AdEx India, a division of TAM Media Research, domestic airlines took up 91 seconds of ad space on television in 2005; this shot up to 335 seconds in 2006. However, advertising in print remains relatively the same.
“Air travel is getting commoditized, smart operations and cool branding are becoming vital to profitability," says Mohit Dhar Jayal, director of brand strategy, A, the agency that handles the account for IndiGo Airlines.
With a 35% increase in advertising spends in one year since its launch, the airline believes more in non-traditional mediums of advertising, such as out-of-home and interactive mediums, rather than television and print.
Similarly, Air India allots maximum percentage of its advertising spends on outdoor activities and sponsorships of events such as online contests, festivals in Mumbai, the Mumbai Marathon and cultural activities.
Deccan Aviation, which launched in 2003 and claims to be the lowest-cost carrier, uses a mix of print, television, outdoor, Internet, radio and SMS, all within its Rs20 crore advertising budget, according to a company from Deccan Aviation. “Our transactional advertising appears almost every day, in almost every newspaper in the country," he says.
Kingfisher Airlines has taken its marketing initiatives to a whole new level, with extravagant activities and events sponsored by the airline to create a niche identity for the brand.
“When we launched, our objective was to create rapid awareness amongst the Indian air traveller," says Vikram Malhotra, deputy general manager, marketing, Kingfisher Airlines. “Our advertising has now evolved to highlight specific brand and product attributes and to build active engagement with our guests through campaigns around King Club, international airline tie-ups, The Kingfisher Airlines Tennis Open, The Kingfisher First Polo Classic, Formula 1, etc," he adds.
Many airlines are also seen roping in brand ambassadors to create a niche. Shah Rukh Khan and Javed Akhtar, who are also members of the board of directors of the company, re-launched Jet Airway’s branding as an international carrier.
GoAir launched a new campaign with the former Liril soap girl and Bollywood actor Preity Zinta. Known more for her dance performances, Yana Gupta is still seen on Kingfisher Airlines, numerous promotions.
While the air is thick with the rival brands vying for attention, mere ads can only serve a limited purpose. For airlines, it is still the experiential factor, or customer satisfaction, which counts to a large extent. A cancelled flight can undo all gains made by pithy advertisements. Dhar says, “The objective is to bring load factors up to 100% and ad spends down to zero." It is on this touchstone that Kingfisher and Jet Airways have scored better than Air Deccan and Indian.
But these top performers are also the ones who have spent the most on ads. In this sector, it pays to advertise.
Tarun Shukla and Mehul Srivastava contributed to the article.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!