Consumer Decision Making and Airlines

1. Consumer Decision Making and airlines

Airline travel for the typical traveller involves time spent in a small seat in a confined space in order to get to the final destination. It also involves getting to the airport by a certain time, checking in with tickets and bags, going through security, waiting for flight boarding, boarding the flight, and experiencing in-flight service. At the final destination it involves disembarking from the plane, proceeding through immigration and customs (if it is an international flight), waiting to collect the bags, collecting the bags from the luggage belt, and then leaving the airport. All in all a number of activites are involved, with the customer and aiport, airline and government personnel all performing a number of services.

These activities and ‘service performances’ can vary somewhat depending on whether the flight is domestic or international, the duration of the flight, and the class of travel that the traveller has paid for. Many consumers have views about airlines and the whole experience of airline travel, and these inform and guide their decision making.

Mariano Ferreyra works for an international software company with offices in a number of Australian capital cities. Part of his job involves quite a lot of travel interstate within Australia, especially between his company’s head office in Sydney and Melbourne, Brisbane and Adelaide. He also is part of a new product development team, comprised of employees from a number of offices around the world. As such, he is twice-yearly required to attend meetings at several of the design centres that the company has in Europe. For his domestic and international trips, Mariano is allowed to choose which airlines he wants to fly, providing that the ticket prices are judged to be ‘fair and reasonable’. He tends to do his own research and make his own bookings, rather than going through a corporate travel agency. He used to deal with them a lot but as travel services have moved online, Mariano has found that it is quite easy to do himself (and make the choices himself).

For his trips to the interstate offices within Australia, he prefers to fly on discount airlines like Virgin Blue and Jetstar rather than on Qantas. He feels the same when he flies within Europe, preferring easyJet and brands like Ryanair over European national carriers like British Airways, Air France and Lufthansa. However, when it comes to long-distance international travel, Mariano prefers to fly on full-service airlines like Qantas or Air NZ.

Short-Haul Decision Making

Mariano does not know much about Tiger Airways, so he does not check that airline’s website when looking to fly interstate (he needs to know a bit more about them before he does this). He usually finds that Jetstar and Virgin Blue are quite a bit cheaper than Qantas regarding the destinations that he needs to fly to. In fact, recently he stopped checking the Qantas site, restricting his choice to the two discount carriers. He ‘just knows’ that Qantas will be more expensive, and can’t justify this to himself (or the company) when the flight duration is a maximum of an hour or two between Sydney and Melbourne, Melbourne and Brisbane, or Sydney and Adelaide. Sure, it’s a bit of a pain having to pay for food on the flights with the discount carriers, and some of the other restrictions that apply, but the higher price on the full-service carrier is not worth it, in Mariano’s view.

Qantas has lost market share in the domestic market since the launch of Virgin Blue a few years ago, and fought back by launching Jetstar. The more recent launch (and growth) of Tiger Airways is expected to further damage its market share. Launching Jetstar as its discount carrier has worked well, though ideally Qantas would like to acquire the business of consumers like Mariano on the Sydney, Melbourne, Brisbane and Adelaid legs that Mariano flies domestically (and which are the key domestic business routes for Qantas). How to do this when many potential passengers like Mariano are price-sensitive is a major challenge.

Of the two carriers in Mariano’s consideration set, nowadays Jetstar is his preferred carrier. He feels the seats are a bit bigger than they are on Virgin Blue, and he is a Qantas Club member so he can use the Qantas Club lounge before the flight (and get a snack and a drink there). He also perceives that being owned by Qantas means that Jetstar planes are pretty safe.

Were it not for his Qantas Club membership, Mariano might be more open to considering Virgin Blue. The perceived bigger seats and greater safety on Jetstar are important to him as perceived rational attributes, but his Qantas Club membership is important to him for both what it rationally offers him, and for its emotional value. Being a member and being able to use the lounges makes him feel good, and a bit different from the other passengers using Jetstar. Since he really has to fly on a discount airline for interstate work, being able to use the Qantas Club lounges is a kind of compensation!

Mariano knows that not having Tiger Airways in his consideration set is something he has to change. It reputably has inexpensive flights and a growing route network, and Mariano believes that the customer service (bookings, check-in, baggage handling, in-flight, etc.) is probably at least comparable to Jetstar and Virgin Blue. To date, though, he has not seen any marketing communications for Tiger, and knows no-one who has flown on the airline. He may check the airline’s website in the future, but really needs to know a lot more about this airline than the website alone may be able to deliver!

Virgin Blue, while still being in Mariano’s consideration set, is really the second choice. This is despite the fact that the airline advertises extensively to keep its brand name and product offerings ‘top of mind’ among consumers; its prices compare favourably to Jetstar’s prices; and it offers regular flights to the cities where Mariano’s company has its interstate offices. Furthermore, it now offers airport lounges in an attempt to match the key competitor’s offerings, and in order to appeal more to business travellers like Mariano Ferreyra.

When Mariano flies within Europe, it is generally for work also. These flights, like the ones on Australia’s eastern seaboard, typically are no longer than two hours in duration. Initially Mariano just flew on the European national carriers that the corporate travel agent in Sydney booked him on. He had a preference for British Airways since it has an extensive route network within Europe, a quality reputation, and it is a full-service, and other standard service offerings. Furthermore, on his British Airways flights Mariano felt safe, and an added bonus was the ability to use his Qantas Club membership card for access to British Airways Club lounges. This gave him a special feeling, even though he always flies economy class, and it helps make him feel better about being so far away from home.