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Industry trends through the eyes
of Economist readers
AIRLINE CATEGORY
SURVEY
AGENDA 2
Survey sample and methodology 3
Overview: Economist readers and air travel 7
Focus 1: Business travel and freedom of choice 11
Focus 2: Premium flyers’ growing importance 18
Focus 3: Increasing competition and technology 25
SURVEY SAMPLE AND
METHODOLOGY
OBJECTIVE
To explore three trends in the general airline market among Economist readers:
1) Cost-cutting and increasing lack of choice in air travel for work (and whether Economist readers are
subject to the same restrictions)
2) The growing importance of premium cabin flyers (and what we can learn from our readers about what
these flyers seek from air travel)
3) The increasing role of technology and level of competition in the market (and how Economist readers
are faring in this new environment)
We hope these findings will help our airline clients refine their messaging and communications, particularly
within The Economist and among more affluent, well-traveled consumers.
4
ALL ABOUT THEIR THOUGHTS
ON AIR TRAVEL
1,052 READERS FROM AROUND THE WORLD ANSWERED
QUESTIONS COVERING THE FOLLOWING TOPICS:
Flying behavior (# times flown, class flown)
Likelihood to travel in first or business for business
compared to before
Use of technology in the travel process
Approximate spend on air travel
Degree of choice and influences/reasons
Research/shopping methods
Brand familiarity and opinions
Frequent flyer programs
Qualitative questions on the decision to travel for
business, the state of air travel, and suggestions
for improvement
Responses were fielded over a one week period
in May 2015.
5
248 ASIA PACIFIC
327 EUROPE
34 LATAM
386 N. AMERICA
REGIONAL SAMPLE TOTAL SAMPLE SIZE: 1,052
6
51 ME & AFRICA
OVERVIEW:
ECONOMIST READERS
AND AIR TRAVEL
7
usually fly first or
business while
traveling long-haul
for work; more than
half fly first, business
class, or premium
economy for long-
haul leisure
54% have taken a short-
haul or domestic
work-related round-
trip flight in the past
12 months; 46% have
taken a long-haul
flight
have taken a short-
haul or domestic
round-trip leisure
flight in the past 12
months; 51% have
taken a long-haul
flight
74% 87%
8
* Round-trip including non-flyers
Q4/5: How many business/leisure round trips have you taken in the past 12 months?
ECONOMIST READERS ARE PREMIUM –
AND FREQUENT – FLYERS
Avg. # Flights* in P12 Mo.
Domestic Business: 4.9
Intl (<6 hours)
Business: 2.8
Intl (6+ hours)
Business: 1.9
Domestic Leisure: 2.1
Intl (<6 hours)
Leisure: 1.8
Intl (6+ hours) Leisure:
1.0
TOP AIRLINES FLOWN
PREVIOUSLY BY REGION
9
Q17: % Top Box (I have flown with this airline before)
* Low sample; use with caution
** Low-cost airlines were only shown to regional respondents
NORTH AMERICA 1. United (93%)
2. American (91%) 3. Delta (89%)
4. Southwest (74%)
5. British Airways (65%)
EUROPE 1. British Airways (87%)
2. Lufthansa (81%)
3. KLM (74%)
4. easyJet (73%)**
5. Air France (72%) ASIA PACIFIC 1. Singapore (78%)
2. British Airways (71%)
3. Cathay Pacific (67%)
4. United (61%)
5. Qantas (61%) MIDDLE EAST & AFRICA
1. British Airways (88%)
2. Lufthansa (75%)
3. Emirates (75%) 4. American (71%)
5. Delta (67%) LATIN AMERICA*
1. American (97%)
2. United (88%) 3. LAN (82%)
4. Delta (79%)
5. Iberia (79%)
UNITED IS THE TOP LOYALTY PROGRAM
36
32 33
28
25 22
36
16
25 25
20 18
9 10
13 13
6 7 7 6
27 26 23 23 21
17 13 12 11 10 9 9 8 7
4 3 2 2 1 1 1 1 Other Unit. AA Delta BA Luft. Air Fr. Emir. None KLM Air
Cana.
Qant. Sing.
Air
Cath.
Pac.
Swiss. Iber. KAL LAN Turk.
Air.
Air
Chin.
ANA JAL
Top Frequent Flyer Programs
% PRIOR FLYERS in Loyalty Program % TOTAL RESPONDENTS In Loyalty Program
10 HOWEVER, EMIRATES MATCHES UNITED IN ITS SUCCESS IN CONVERTING PREVIOUS
FLYERS TO ITS LOYALTY PROGRAM
Q19: With which of the following airlines are you a frequent flyer/rewards member?
FOCUS 1:
BUSINESS TRAVEL AND
FREEDOM OF CHOICE
BUSINESS TRAVEL MYTHS
1. Travel for work is increasing, but so is cost-cutting
– which means business travellers are becoming
less premium consumers, opting to fly coach and
penny-pinching on fees¹… some employers are
even turning cost-saving into a game²
2. Business travelers may not have a choice in the
airlines they fly due to increasing barter deals³
and partnerships, and therefore should not
necessarily be a primary target for advertising
12 (AT LEAST WHEN WE’RE TALKING ABOUT ECONOMIST READERS)
1. USA Today, April 5, 2015: “Business travel is back, perks are not”
2. Financial Times, April 30, 2015: “Everyone’s a winner in the game to cut business travel costs”
3. Harvard Business Review, Sept 12, 2012: “The exploding business of bartering”
ACTUALLY, TRAVEL FOR BUSINESS IS STILL
SEEN AS ESSENTIAL IN MANY SITUATIONS 13 … ECONOMIST READERS STILL FLY
Q7: How do you make decisions to fly for business over alternatives such as teleconferencing, email, etc.?
THERE ARE NO
SUBSTITUTES
“Telecons are poor for large groups or
complex topics.”
FACETIME IS IMPORTANT
“Facetime with people
involved is very important. Body
language says a lot about the person; people are usually
themselves in person.”
TRAVEL PROVIDES CONTEXT
“In-person, on-site
information provides
much greater context than teleconferencing,
email, etc.”
INFLUENCE OPINIONS
“Need to meet face to face and influence
opinions.”
TRAVEL LEADS TO
ACTION
“While teleconferencing is
convenient, it adds a layer of anonymity and irresponsibility to follow
through on some decisions.”
TRAVEL MEANS “BUSINESS”
“Any serious
negotiation requires a trip.”
AND PRICE IS LESS IMPORTANT THAN
CONVENIENCE OR COMFORT
80
60 59 54 53
43
33 31 26
22 20 12 8
59
37 36 33 36 21 13
24 10 7 6 4 2
Fewer
connect.
Loyalty
programs
or points
Seat
comfort or
options
On-time
reliab.
Low price Flexible
changes
Superior
in-flight
service
In line with
req. or
restrict.
from my
employ.
Ground
offerings
Free food
/ drinks
In-flight Wi-
Fi
Wide
range of
entertain.
On-board
lounge
Positive Influences on Airline Choice (Travel for Business)
Influences Would Cause a Switch if Not Provided
14 IN ADDITION, EMPLOYER RESTRICTIONS ONLY IMPACT 1/3 OF RESPONDENTS
Q12: Which of the following positively influences your choice of airline for business travel?
Q13: Which would cause you to switch to a different airline from your preferred or usual business airline?
In fact, many Economist readers are
actually more likely to fly first/business
class for work now than before; out of
those respondents flying for work 10,
5, and 2 years ago…
… 24% are more likely now
vs. 10 years ago – prior
to the recession!
… 19% are more likely now
vs. 5 years ago
… 15% are more likely now
vs. 2 years ago
ECONOMIST READERS WHO FLY FOR
BUSINESS RETAIN FREEDOM OF CHOICE 16
Q14: How much freedom of choice do you have when selecting a flight for business? Select all of the below that apply to you.
OUT OF ECONOMIST BUSINESS TRAVELERS:
92% have at least
some choice in
airline flown
69% are not affected
by employer
restrictions at all
SUMMARY AND IMPLICATIONS
Economist business travelers remain an attractive target for advertising, despite general market trends in
the opposite direction
While there may be a general trend towards cutting costs and barter deals, Economist readers still see
a need to fly for work, and aren’t necessarily spending less than before
Price is often less important than loyalty programs, comfort, and convenience, likely due to things like
making it to a meeting on time and refreshed being more important than saving money
In fact, a quarter of respondents who traveled for business ten years ago and are still traveling now say
that they are actually more likely to travel first/business class now when flying for work
On top of that, Economist respondents tend to have at least some choice in airline – only 8% never have
a say in the airline they fly, and only 31% cite any sort of restriction – airline, class/cabin, or expense limit –
at all
17
FOCUS 2:
PREMIUM FLYERS’
GROWING IMPORTANCE
Fees and a la carte systems are becoming more popular among airlines, leading
to a greater divide between the front and back of planes. Premium consumers
are now increasingly important to airlines’ bottom lines… what do they want
from their flying experiences?
EXTRA AMENITIES DO POSITIVELY
INFLUENCE PREMIUM FLYERS 20 HOWEVER, IT IS LOYALTY PROGRAMS, (SEAT) COMFORT, AND GOOD SERVICE
THAT ARE “MANDATORY”
Q12: Which of the following positively influences your choice of airline for business/leisure travel?
Loyalty Programs
Seat comfort
Flexible changes
Service
Ground amenities
On-board lounge (long-haul)
POSITIVELY INFLUENCES
1ST OR BUSINESS CLASS
Loyalty Programs
Seat comfort
Service
CAUSES 1ST OR BUSINESS
CLASS TO SWITCH
AIRLINES
Seat comfort
Flexible changes
Employer restrictions (domestic or short-haul)
Wi-Fi (domestic or short-haul)
POSITIVELY INFLUENCES
PREMIUM ECON
Loyalty programs (domestic or short-haul)
Seat comfort
Employer restrictions
(domestic or short-haul)
Wi-Fi (domestic or short-haul)
CAUSES PREMIUM ECON
TO SWITCH AIRLINES
97% OF FRONT CABIN FLYERS*
BELONG TO A FREQUENT FLYER OR LOYALTY PROGRAM
(VS. 89% TOTAL RESPONDENTS)
* Across business and leisure travelers who have flown in the past 12 months
REGARDING LOYALTY PROGRAMS,
PRIORITY BOARDING MATTERS MORE
THAN AVERAGE TO PREMIUM FLYERS
55
70
62
72 66 67
62 60 58
Total Short-Haul
for Work: First
or Business
Long-Haul
for Work: First
or Business
Short-Haul
for Leisure:
First or
Business
Long-Haul
for Leisure:
First or
Business
Short-Haul
for Work:
Premium
Econ
Long-Haul
for Work:
Premium
Econ
Short-Haul
for Leisure:
Premium
Econ
Long-Haul
for Leisure:
Premium
Econ
% Citing Priority Boarding as a Reason to Join a
Loyalty Program
22
Q20: Which of the below would encourage you to join a particular frequent flyer/rewards program? (Select all that apply.)
HOWEVER, DESPITE PAYING MORE,
PREMIUM FLYERS STILL PREFER REWARD
POINTS BASED ON DISTANCE FLOWN
About a quarter of front cabin
leisure travelers prefer reward
points based on price paid (vs.
16% of total respondents), but half still prefer reward points based
on distance flown, and the
remainder have no preference.
23
Q21: Do you prefer it when reward or frequent flyer points are based on distance flown or price paid for the ticket?
SUMMARY AND IMPLICATIONS
Premium cabin consumers are increasingly important as the gap in offerings between premium cabins
and basic economy widens
While extra amenities like lounges and chauffeurs are appreciated by premium cabin flyers, it is loyalty
programs, seat comfort, and service that are “mandatory” in a customer experience
In terms of loyalty programs, reward points and upgrades are important, but it is an appreciation for
priority boarding that separates premium cabin flyers from economy flyers
Therefore, while airlines like Singapore and Emirates do offer amenities that go above and beyond the
standard, it is likely that their superior comfort and service are what drives premium cabin flyers to choose
and rate them highly
24
FOCUS 3:
INCREASING COMPETITION
AND TECHNOLOGY
Low-cost has gained market share among
both leisure and business travelers¹
In 2013, US low-cost carrier unit revenues
exceeded those of legacy carriers on
domestic routes
In Asia and the Middle East, low-cost
carriers outperform every other sector
in the industry
Low-cost carriers are growing in long-haul
as well, with airlines like Norwegian and
Wow entering the US market²
On the opposite end of the spectrum, new
premium offerings from airlines like Emirates,
Qatar, and Singapore are drawing business
away from local carriers in North America
and Europe³
THERE ARE MORE COMPETITORS IN THE
MARKET; CONSUMERS HAVE NOTICED 26
1. The Telegraph, Nov 16, 2013: “Low-cost airlines have come a long way. But who will win the battle?”
2. Skift, March 4, 2014: “Low-cost carriers continue to eat the world”
3. AdWeek, October 12, 2014: “Emirates is the world’s most glamorous airline”
“MORE COMPETITION IN MANY
ROUTES HAS LED TO BETTER VALUE
FOR MONEY FOR TRAVELERS LIKE
ME.”
– ECONOMIST
INSIGHTER
Comparison shopping is the norm, and many
savvy travelers use price history and prediction
sites to decide when to buy¹
The practice of using comparison sites is
valued at $6.7 billion a year²
Conversely, technology has helped both the
industry and consumers by increasingly
streamlining the flying process
― Smartphone interaction is on the rise, with
tablet and smartphone bookings
expected to rise to 37%, and mobile
boarding pass use expected to be the
preferred choice of 18% of passengers, by
2016³
– For more premium flyers, technology is
being used for greater personalization4
TECHNOLOGY IS MAKING THAT CHOICE
APPARENT, BUT ALSO FACILITATING THE
FLYING EXPERIENCE 27
1. LA Times, June 1, 2015: “Delta blackout makes cheap airfare game even tougher”
2. Chicago Tribune, May 22, 2015: “Study: consumers benefit from fare-comparison sites”
3. Skift, May 28, 2015: “Passengers want simpler tech solutions from airports and airlines”
4.. New York Times, March 18, 2014: “Airlines use digital technology to get even more personal”
“INTEGRATION OF…
TECHNOLOGY INTO THE PROCESS
HAS REMOVED MANY OF THE
INCONVENIENCES OF FLYING.”
– ECONOMIST
INSIGHTER
RESPONDENTS OF ALL AGES ARE
EMBRACING SMARTPHONES IN TRAVEL
80 75
41 37 40
12 9
74 71
41 40 33
17 12
68 69
31 32 28
21
6
60 60
36 34 28 27
10
40 33
22 21 16
50
2
Accessed a
boarding pass
Checked-in for a
flight
Booked a hotel
room
Booked an
airplane ticket
Reserved
transportation on
the ground
None of these Submitted an
expense
report/claim for
travel
Smartphone Usage for Travel in Past 12Mo
Under 35 35 to 44 45 to 54 55 to 64 65+
28 EXCEPT FOR 65+, BUT ESPECIALLY UNDER 35s
Q8: In the past 12 months, have you used a smartphone to perform any of the following for travelling?
HOWEVER, RESPONDENTS STILL SHOP
USING AIRLINE WEBSITES
57
40 38
26
9 6 6
75
66
17
41
17 13
1
Airline websites Travel booking /
discount sites
Human travel agent Search engines
(e.g. Google Flights)
In-person friend,
family, or colleague
recommend.
Reviews from friends
or strangers on
social media or
review sites
None of these
Used to Research, Check, or Shop Around in P12M
Business/For Work Leisure
29 EVEN IF A VARIETY OF SOURCES IS USED AND AVAILABLE
Q11: Which of the following have you used to research, check, or shop around for business/leisure flights in the past 12 months?
In fact, the vast majority – >75% – of
respondents using most other online
and offline sources (booking sites,
search engines, etc.) also use airline
websites when researching or
shopping for business or leisure tickets.
Q11: Which of the following have you used to research, check, or shop around for business/leisure flights in the past 12 months?
AGE HAS AN IMPACT ON RESEARCH
AND SHOPPING SOURCES 31
Q11: Which of the following have you used to research, check, or shop around for business/leisure flights in the past 12 months?
IN GENERAL, THE OLDER THE
BUSINESS TRAVELER, THE MORE
TRADITIONAL HIS/HER SOURCES
IN LEISURE TRAVEL, MILLENNIALS
ARE MOST LIKELY TO
COMPARISON SHOP ONLINE, BUT
ALSO CONSULT ADS AND FRIENDS
A SUBSET OF LEISURE TRAVELERS
ARE VERY INVOLVED IN
RESEARCH, AND USE A WIDE
RANGE OF SOURCES
ECONOMIST READERS KNOW AND/OR
LIKE SOME LOW-COST BRANDS AS
MUCH AS TOP LEGACY CARRIERS
BA
Southwest
easyJet
United American
Lufthansa
Delta
KLM
Air France
Ryanair
JetBlue
Swissair
Singapore
Jetstar Airways
Cathay Pacific
Air Canada
Qantas
Emirates
Air Asia Iberia
Turkish
JAL ANA
Air China
Spirit Airlines
Korean Air LAN
Aeroflot
China Eastern
China Southern
Asiana
-5
5
15
25
35
45
50 60 70 80 90 100
Familiarity vs. Favorability Size of bubble = % Flown
Origin = Average Familiarity/Favorability
32
% Flown or Familiar With (Top 3 Box)
%
Lik
e o
r P
refe
r
IN FACT, SOUTHWEST SCORES VERY
WELL, ALTHOUGH CARRIERS WITH ULTRA-
PREMIUM OFFERINGS ARE MOST LIKED
BA
Southwest
easyJet
United
Lufthansa
Delta KLM
Air France
JetBlue
Swissair
Singapore
Cathay Pacific
Qantas
Emirates
15
20
25
30
35
40
45
50
90 92 94 96 98 100 102 104
Familiarity vs. Favorability (Well-Known and Liked) (Size of bubble = % Flown)
33
%
Lik
e o
r P
refe
r
% Flown or Familiar With (Top 3 Box)
SUMMARY AND IMPLICATIONS
Technology is a double-edged sword for legacy airlines – while it has allowed for greater convenience
and streamlining, it has also made competition fiercer
Economist readers seem to have adopted technology and smartphone usage in travel to a high degree
They reported high levels of comparison shopping both online and offline; however, the vast majority of
older respondents use airline branded websites as a research or shopping tool in conjunction with other
sources, and there is a subset of (likely younger) respondents who check a wide range of sources listed
As a result Economist readers are well aware of new entrants to the market – many low-cost carriers rival
legacy carriers in familiarity, and non-Western airlines Singapore and Emirates top the charts in
favorability
– Low-cost airline Southwest also enjoys high levels of favorability… higher than all other US airlines
listed in the survey
34