Budget airlines have enjoyed a stellar rise since their emergence in South-east Asian skies a decade ago. Will these carriers go the distance over the long haul?

Change appears to be the only constant in ASEAN’s budget aviation landscape in 2013 as LCCs pursue ambitious expansion plans, carving out a bigger share of the passenger throughput at the region’s main hub airports.

With the launch of Golden Myanmar Airlines in early 2013, LCCs are now based in seven out of the 10 ASEAN member states. Only Brunei, Cambodia and Laos are without their own homegrown LCCs.

A constant state of brand evolution
As 2013 rolled out, several LCCs in ASEAN began to tweak their brand names and this is none more apparent in the Philippines than elsewhere in the region. AirPhil Express, a subsidiary of Philippine Airlines, was rebranded as PAL Express while Zest Air merged with Philippines AirAsia to operate as AirAsia Zest.

SEAir became known as Tigerair Philippines, a name that might change again as Tigerair has sold its 40 per cent stake in Tigerair Philippines to Cebu Pacific Air – the latter will initially just add its own title to the airplanes of the former’s small fleet. Tigerair and Cebu Pacific Air will also cooperate on their services between the Philippines and Singapore.

In Singapore, Tiger Airways rebranded itself as Tigerair in July 2013, adopting a new logo that resembles a tiger’s tail.

Soaring expectations
A clear sign of strong optimism in their growth performance ahead, eight of the LCCs (see table) covered in this report have more airplanes on order than they have in their current fleet.

AirAsia continues to be the cherry on the cake for Airbus with more than 240 delivery positions – although it should be noted that some of these are slated for its operations in Indonesia, Thailand and the Philippines (and possibly in India). AirAsia X is re-committed to returning to Europe with a reportedly more efficient Airbus A330 and is on the brink of replicating its blueprint in Thailand with Thai AirAsia X.

Indonesia’s Lion Air is the next most aggressive LCC, taking a leaf out of AirAsia’s book to roll out Malindo Air in Malaysia and Thai Lion Air in Thailand. In an about-turn of its long-term strategy however, the airline has also cancelled its outstanding order for five Boeing 787-8 Dreamliners – initially destined for its premium subsidiary Batik Air.

Not to be outdone, Singapore’s Tigerair has entered into a minority partnership with Taiwan’s China Airlines to establish a new Taipei-based LCC that is likely to carry the Tigerair branding.

Thailand’s Nok Air has also entered into a joint venture with Singapore’s Scoot to establish NokScoot to operate medium and longhaul services out of Bangkok’s Don Mueang Airport – a clear response to the ‘invasion’ of Thai AirAsia X and, to a lesser extent, Thai Lion Air. According to an industry source, NokScoot will start up in early June 2014 with a couple of Boeing 777s likely to be sourced from Singapore Airlines with destinations in China, Japan and South Korea on its radar. To leverage on the partnership synergy, Scoot’s Singapore-Bangkok service is expected to fly into Don Mueang Airport instead of Suvarnabhumi Airport from May 2014.

A push for wider horizons 
As Cebu Pacific Air started operating A330-300s and extended its network to Dubai, PAL Express too received an A330-300 from its parent company – Philippine Airlines – and launched its own five-times-weekly services to Dubai.

Thai AirAsia X will begin operations with A330-300s in 1H2014, while Scoot too will be in a position to launch new longhaul routes when it receives its first B787-9 Dreamliners in 2H2014. Jetstar Asia will also take delivery of its first B787-8s later this year but there is yet any indication which routes these will be deployed.

Lion Air will turn Batam – located just south of Singapore – into its second hub to initially serve as a nexus for east-west domestic travel. Over time, Lion Air hopes to increase Batam’s domestic destinations from its current 15 to 20, and add international links to Guangzhou, Hong Kong, Bangkok, Jeddah, New Delhi and Mumbai.

Reaching out globally through GDSs
More LCCs have turned to global distribution systems (GDSs), making it easier for travel consultants to access their content and drive sales. By end-2013, the services of 26 LCCs worldwide are bookable via Abacus, which expects to grow this by 10 per cent in early 2014.

Amadeus Asia Pacific’s executive vice president, airline commercial, Hazem Hussein, said: “The competition among LCCs in South-east Asia is tough, and airlines need to evolve to get ahead. LCCs that tap our extensive travel agency network can reach new customers and improve their yield.”

Sabre Travel Network’s vice president and general manager Asia Pacific, Hans Belle, said: “LCCs in Asia are evolving their merchandising strategies to differentiate, compete and extend their reach into new customer segments. Our global travel marketplace allows airlines to promote, personalise and sell their seats to 400,000 travel (consultants) around the world, and tap into data-rich solutions that give insights on customer shopping and booking trends, resulting in better yields and more personalised customer service.”

This article was first published in TTG Asia, February 21, 2014 on page 18 and 20. To read more, please view our digital edition or click here to subscribe.

So, how do we rebuild a crisis-hit destination? Raini Hamdi asks brand and communications experts.

Typhoon Haiyan robs the Philippines of its Fun. Thailand’s anti-government ‘shutdown’ gives Amazing a different meaning. Serial rapes render Incredible India impotent.

As any branding or communications guru will tell you, all it takes is a crisis to annihilate a destination’s image. As Asia evolves economically, socially and politically, and as natural disasters become a staple diet, more crises can be expected.

So, what’s an affected destination to do? Should it replace its branding? When arrivals are down due to an ‘unsafe’ label and travel advisories, can branding and advertising bring back the numbers? Are daily updates designed to give clients ‘the facts’ effective, or do they go straight into spam or, worse, serve only to remind clients of a crisis?

Turning negative into positive
When the 2004 Asian tsunami hit Thailand, Patrick Gauvain, founder and managing director of Bangkok’s oldest design and communications agency, Shrimp Asia, had just launched for the JW Marriott, Bangkok a new Japanese restaurant which his agency branded as –Tsunami.

“Marriott called a crisis meeting and wanted to change the name (it had just spent three million baht, or US$91,352, on a promotional campaign) and I suggested not to do this, but to turn a negative into a positive.

The Tsunami restaurant then announced that a percentage of its revenue would be donated towards the Tsunami Relief Fund. It raised quite a lot of money, and more brand awareness from its good deed,” Gauvain recalled.

“Something similar could be done with the Philippines. For example, Fly to the Philippines with Philippine Airlines (PAL) and 10 per cent of your airfare will go towards Haiyan. The destination could amend its ads/commercials and even make a PR/online campaign out of it. PAL is government-owned anyway, so it should help support the cause and encourage the private and domestic airlines to do the same.”

When a disaster hits, the last thing a destination wants to do is do nothing, said branding experts, consultants and communicators.

“All brands are fragile, none more so than countries or destinations in crisis. Most destinations react with silence and in each case, they do irreparable damage to their brand, said Quo Global’s CEO, David Keen.

There is much to be done; indeed, crises are “opportunities for destinations to invigorate their perception”, he said (see box below).

Bill Barnett, managing director of C9 Hotelworks, points to India as an example of a brand that has “gone into hibernation”.

“India has not done anything to address the rape issue, which has stunted tourism growth. Zero. The past few years Incredible India was one of the

best tourism campaigns anywhere, but it has lost the plot and gone into hibernation,” said Barnett.

But even if they are not silent, few countries actually get it right in rebuilding the destination. The reasons run the gamut: bureaucrats running tourism making a corporate decision on a crisis management branding or situational awareness; changes in manpower in bureaucracies; lack of alignment between public and private sectors; absence of a single tourism agenda and single voice; private sector players’ apathy and bottomline first priority; lack of budget or budget foolishly spent; appointments of agencies that are not based on merit but corruption and cronyism – in some parts of Asia where these are rampant, this interlinked, complex ecosystem that enables effective branding and communications can be nothing short of  dysfunctional.

‘Not in the thick of things’
Asked to rate how Thailand and the Philippines have managed their respective crises (at press time in late January), Barnett said: “So far, they have not been in the thick of things. In either case, what we’re missing are tourism or hotel brands in leadership roles. Barnett pointed to Bali and the Bali Hotel Association as a good example of leadership over the years when terrorism struck the island. “There was clarity as there’s a large organisation speaking for tourism. This is key. In so many other cases, tourism ranks far below other sectors and what comes out are political statements.”

Ken Scott, managing director, ScottAsia Communications, agreed. “The Philippine authorities were slow off the mark. The impact of Haiyan was beyond what they were prepared for – politically, physically, and psychologically.

“Thailand’s political situation has been an on-off issue over the last eight years, more a condition than a crisis. But at the moment things are veering towards crisis and the tourism authorities should have their crisis scenario preparations made,” he said.

Shrimp Asia’s Gauvain said TAT’s situational updates on the anti-government protests “are trying to justify the situation, not put out the fire”.

“They (TAT) should downplay the protestors. They should be using Facebook, Instagram, Line; create competitions where participants can win awards like a weekend in Phuket, free flights and meals, etc, sponsored by the private sector. When someone ‘Likes’ something on these apps, they disseminate that information to their friends – the tourist takes ownership of the brand and becomes your ambassador,” said Gauvain.

Scott however thought TAT’s updates were “good”, “frequent” and “information rich”, although he too noted they should be more prominent on the home pages of tatnews.org, tourismthailand.org and na.tourismthailand.org.

He acknowledged the now-standard reaction by NTOs and DMCs to send out regular updates when a disaster strikes could be counter-effective by drawing attention to a negative, but “on the principle of one step back two steps forward, it has to be done”.

“Stakeholders are intelligent people. They appreciate being informed so they don’t unwittingly put their clients into harm’s way due to ignorance,” said Scott.

Stimulating a rebound
A crucial aspect of disaster recovery is stimulating a rebound, especially when recovery these days tends to be “quicker”, according to Barnett, who traced crisis-hit Asian destinations in recent history and noted a three- to six-month recovery timeframe.

“Unfortunately the first business to go is longhaul corporate and MICE, which is high-yielding, so you can’t replace long lead time business. You have to simply fill the rooms on ad hoc strategies and what hurts the most is room rates. Thankfully with the LCCs it’s much easier to turn on the tap,” he said.

However, LCCs, while fuelling travel among Asians, also open up a multitude of destination choices for them. This is why there needs to be “a real promotion by the private sector, with the support of the NTO, to entice them back, said Gauvain.

“For the Asian market it’s psychosomatic. Give a Chinese mainlander a discount opportunity and they will be there like a shot,” he said.

UK clients would too, said David Kevan, director, Chic Locations UK, offering a tour operator perspective on whether advertising/promotion works in a crisis.  “At the risk of sounding callous and cynical, it is now accepted that many clients in the UK, and probably in most other countries, can be opportunistic hyenas. So today’s disaster area can be tomorrow’s holiday bargain. In many cases, there could be clients who feel by returning quickly to a destination theyare benefiting the local economy. But it is the thought of a reduced price and a holiday bargain that is the main stimulation,” he said.

“With the right offer – usually significantly reduced rates, free nights, etc – a destination can start to see tourists returning quicker than anticipated.

“This particularly applies in a destination that was enjoying good popularity and then was impacted by political or natural events. It is much more difficult to rebuild a destination that was in decline anyway as, even at rock bottom prices, it is unlikely you can stimulate demand.”

Turning brand crisis into opportunity

Crises are “opportunities for destinations to invigorate their perception”, said Quo Global’s CEO, David Keen.

“Should the Philippines stop marketing the destination in light of (Haiyan)? No, it should never stop marketing the country but it has to evolve the current perception because it does not talk to future investors and belittles the country’s image when there’s a natural disaster.

“The government should align itself far more closely with the vibrant private sector and evolve the perception of the country accordingly,” he said.

Keen’s point is It’s More Fun in the Philippines is “myopic” to begin with.

“One can reasonably argue that any beguiling tagline may be rendered ineffective after a natural catastrophe, but surely a tagline that talks to the credibility, opportunity, personality and particularly, in the Philippines’ case, investment, would be taken more seriously and would bring significant long-term benefit to the country?

“Today Palawan is gearing up to position itself as the next Bali, Phuket or Samui. The entrepreneurial governor has taken the view that Palawan needs to form a powerful independent brand to attract foreign investment. The new brand is intended to draw on the magnificent beauty of the province and the natural attraction of the people in the province to create desire from the biggest tourism players in the industry. Does It’s More Fun in the Philippines talk to that aim?

This article was first published in TTG Asia, February 21, 2014 on page 5. To read more, please view our digital edition or click here to subscribe.