Joon: Basic yet chic

Courtesy Air France

What’s basic yet chic? That, says Air France, is the design of the uniform for cabin crew of its new subsidiary airline, Joon. You can expect to serve flight attendants in trendy casuals that include blazers, polos, ankle pants and sneakers. Apparently it is Silicon Valley inspired.

A statement issued by Air France said: “Its visual identity is based on an electric blue colour code symbolizing the airline’s dynamic attitude, as well as the sky, space and travel.”

Believe it, the colour has much to do with the kind of image projected by the airlines. Targeting millennials, Joon moves away from the convention of a neutral and sedate hue for something more in line with the outgoing disposition of younger jet-setters.

Many years ago when Singapore Airlines (SIA) launched a regional carrier called Tradewinds, there was much ado about the crew uniform to project the more casual mood of leisure travel – something you might wear on a vacation. That changed when its successor SilkAir took over to target business travel and other more serious travellers as well.

Courtesy Scoot

But it is Joon that is going completely millennial, right down to white trainers.

Courtesy Air Canada

Meantime, Air Canada is going retro. Its maple leaf logo design returns to the airline’s look 24 years ago, incorporating the circle loop. Black replaces red in the letterings on the aircraft, and flight attendantswill match with black uniform highlighted with a red tie or scarf.

Looks like you either go hip or nostalgic if you want to make a statement.

What do millennials want?

Courtesy Air France

Air France may have struck it right in launching Joon as a “lifestyle brand” targeting millennials, designed to meet the requirements and aspirations of a young working clientele whose lifestyles revolve around digital technology.

Goodbye baby boomers, hello millennials!

Air France defines the new generation of travellers as aged between 18 and 35 years. Quite aptly, the name Joon is a play on the French word “jeune”, which means “young”.

What do millennials want, travelling?

Millennials are IT-savvy and rely on electronic tools and applications going about doing the things they do. For them, for example, a paper boarding pass is a thing of the past when a smart phone can do the job. Social media is very much a part of their lives.

Millenials value immersion in cultural experiences more than mere sightseeing and collecting souvenirs of the places where they have been. Instead of popular tourist destinations, they prefer adventures to exotic places that are usually off-the-beaten-track.

While millennials are not particularly thrilled by frivolous frills, that does not mean they travel cheap. Far from it. They are in fact brand conscious, and would pay for something that they fancy or must try. But they will not spend on stuff that do not value-add their experiences. That way, they can afford more experiences, travelling more frequently.

Millennials are the NOW generation, who are prepared to rough it out if they had to. For them, travel is more a means to an end. They are therefore less likely to complain about not being pampered by the crew on board, but they do expect efficiency and immediacy of result. Hence, the absence of fuss, boosted by technology capability that allows room for them to exercise some degree of control of what they need and want, appeals to them.

It is this new generation of travellers, says Air France, who inspired the formation of Joon which will take to the sky in fall.

Airlines target millennials with lifestyle branding

Air France to “boost” performance with new low-cost carrier

Legacy airlines in Europe have long been feeling the pinch from low-cost carriers such as Ryanair and Easyjet. Now it looks like Norwegian Air Shuttle and WOW Air are pushing them to look farther before they lose more ground.
Lufthansa already offers a low-cost trans-Atlantic option from Europe to Las Vegas, Orlando, Miami and Seattle in the United States.

The International Airlines Group which owns British Airways, Iberia, Aer Lingusm and Vueling has just added another low-cost carrier – Level – to its stable. Level, based in Barcelona, will fly to Los Angeles and Oakland in California USA, Punta Cana in the Dominican Republic, and Buenos Aires in Argentina. Fares start at the familiar €99 reminiscent of the Norwegian and WOW Air’s promotions.

Courtesy Air France

Following in their footsteps is Air France, which announces the formation of a new subsidiary low-cost airline – Boost as its working name – planned to commence operations in winter. The airline will fly from the main hubs of the Air France/KLM group to destinations in Italy, Spain and Turkey initially, and then farther to destinations in Asia. Norwegian is already flying to Bangkok and will in October connect London with Singapore.

But Boost will be taking on full-service airlines as well, such as the Middle East carriers of Emirates Airlines, Etihad Airways and Qatar Airways which are already ruffling the feathers of the regional big birds of Singapore Airlines and Cathay Pacific.

The developments point to a gradual convergence of the low-cost and full-service product perceived value wise. It’s the antithetical success of low-cost carriers pushing to bridge the gulf and the failure of legacy airlines not being able to maintain if not increase the differentiation. It looks like the European tug-of-war is pulling the legacy airlines towards the centre line.

Airlines brace for the hard times of a troubled Europe

Two British Airways aircraft, with British Airways plane taking off in background.

Two British Airways aircraft, with British Airways plane taking off in background.

IT is easy to blame Brexit. International Airlines Group (IAG) which owns British Airways (BA) and EU carriers Iberia, Vueling and Aer Lingus, says the weak pound has caused its operating profits for Q2 (Apr to Jun) to fall below forecasts, even the number (€555m) (USD618m) is higher than a year ago ((€530m). The weak pound has cost the airline €148m.

But, of course, BA is a key contributor to IAG’s bottom line. IAG is not too upbeat about the immediate future as it “continued to experience a weaker trading environment in our UK point-of-sale business, which represents around one third of total revenue.”

The situation is definitely not helped and in fact made worse by the slew of terror attacks across the continent. Other European airlines such as Air France-KLM and Lufthansa are also under a lot of pressure to keep the numbers up, warning that travellers would avoid coming to popular destinations in their home countries.

Air France-KLM reported a 5% dip in revenue for Q2 to €6.22bn. The airline said: “The global context in 2016 remains highly uncertain… resulting in an increasing pressure on unit revenues and a special concern about France as a destination.”

So the problem is not entirely Brexit. And as the pound weakens and reduces purchasing power, and so too as travellers stay away from popular tourist destinations across Europe, the paradox is that airlines will be persuaded to reduce fares to shore up the demand for seats.

Ryanair CEO Michael O’Leary, referring to recent bombings, said: “Airlines have to respond with lower prices to keep people flying.” This will at the same time exert pressure on rival airlines to similarly take the same course. Mr O’Leary predicted average fares to fall approximately 7% this year.

Fortunately the continuing low fuel prices are working in the airlines’ favour although many are already complaining about the need to lower prices. So don’t expect the fuel surcharge to come down.

Budget phobia grips European airlines

Courtesy Getty Images

Courtesy Getty Images

THE strike by German airline Lufthansa’s pilots may be over a different personnel issue, but it reflects similar circumstances faced by Air France (see Air France/Union dispute reflects a divisive and unsure industry, Oct 3, 2014).

European airlines are gripped by budget phobia as both Air France and Lufthansa have blamed the strikes not only for the costly disruption of flights but also for hindering their efforts to effectively compete with the likes of Ryanair and easyJet through their respective subsidiaries, Transavia (Air France) and Germanwings (Lufthansa).

On the one hand, it is an issue of fair employee compensation and welfare, and the integrity of the human resource administration. On the other, it is a matter of survival in the competition that ultimately must address the issue of costs.

The imbroglio can only benefit the budget carriers, as disgruntled travellers switch their allegiance. easyJet announced a windfall riding on the Air France/union dispute, which had boosted its revenue by £5m (US$5.35m) (see Easyjet rides on Air France’s troubles, Oct 8. 2014).

Lufthansa management has offered to retain the pension scheme for employees who joined the company before this year. The scheme allows pilots to retire at age 55 but they will continue to receive up to 60 per cent of their pay before regular pension payments kick in at 65. However, Lufthansa will increase the retirement age for new recruits.

Apparently the pilots union has proposed a plan to cover the costs of retaining the current scheme. It would be interesting to find out what.

The industrial action has cost Lufthansa 70m euros (US$89m). The airline failed to get the court to declare the strikes as illegal, and the Vereinigung Cockpit (VC) union does not rule out further action.

Until the dispute is settled, budget carriers can look forward to a better year-end season as travellers make advance bookings for Christmas and the New Year. easyJet announced it has sold 25 per cent of its seats for the next six months.

Easyjet rides on Air France’s troubles

Courtesy AFP

Courtesy AFP

AIR FRANCE should feel chastened by Easyjet’s jubilant admission that the strike by French pilots had brought it a windfall. The industrial action has boosted the budget carrier’s revenue by about £5m (US$5.35m), raising hope of the financial year ending September 30 achieving better pre-tax profit of between £575m and £580m, previously expected to be between £545m and £570m. This will be Easyjet’s fourth consecutive year of record profits.

The Air France/SNPL (Syndicat National des Pilotes de Ligne) dispute may be said to be fulfilling a prophecy that the French flag carrier feared. The issue at heart was Air France’s plan to expand budget subsidiary Transavia’s network across Europe with regional hubs established at airports outside France, and this raised its pilots’ concern about transfers to Transavia and being paid lower wages and hired on less favourable terms as regulated by the country where they are based.

For Air France, growing Transavia a strategy to better compete with the likes of Easyjet and Ryanair, which together with the growing number of low-cost operators, have taken a big chunk of the business away from legacy carriers. Inevitably it must weigh in the factor of cost, a sizeable part of it is wage-related. Perhaps there is a strong reason here why independent full-fledged budget carriers such as Easyjet and Ryanair tend to fare better than upstarts spawned by established full-service airlines.

Lufthansa faces the same problem, when its pilots went on strike in protest against the airline’s cost-cutting plan to introduce new low-cost units to improve its competitive edge. This led to a dispute over retirement benefits for pilots, resulting in strikes in August and September that affected operations at Frankfurt and Munich, disrupting flights to major destinations such as New York, Washington D.C., Boston, Chicago, Los Angeles, Dallas and Atlanta in the United States, and to gateway airports in Asia including Singapore and Tokyo.

Needless to say, the single most critical focus of any budget carrier is cost even as it means a necessary sacrifice of service, the lack of which may somewhat be compensated by the customer’s pre-flight low expectations. Most of the other factors may be said to be universal applications to all airlines, though in varying degrees how they impact on the bottom-line. A cheaper fuel bill will go a long way to boost the carrier’s viability, compared to how on the other hand the higher cost of fuel is more likely to bear a heavier toll on a budget carrier than a legacy airline. Easyjet said it expected its fuel bill for the next financial year to decrease by about £50m, and that is a huge plus.

One may argue that Easyjet’s windfall from the Air France strikes might be a fortuitous once-off event, with more passengers switching to Easyjet in light of the disruption. The question remains as to whether the switch will continue to trend even after complete normalcy returns to Air France. It is more than just a foot in the door for the competitor but a clear signal to the likes of Air France as to where the competition is heading in Europe.

Easyjet CEO Carolyn McCall has added a new spin to what the low-cost model means in a recent interview with BBT (Buying Business Travel, Jun 18, 2014): “It means we have new engines, high fuel efficiency. Our plane utilisation, turn-time and load factors are very high. We use our assets really well. We use our assets really well. We don’t have fancy offices, we have a hanger – open plan offices, and we share space with plane maintenance. It’s very important to us, we’’ never lose sight of it – without that low-cost model, we wouldn’t be able to do the low fares.”

Even if Air France finds that a little stretched, it must recognize the close call, especially when  budget carriers begin paying more if only some attention to customer service, albeit their own differentiated brand. Even Ryanair chief Michael  O’Leary said his airline, noted for its bad service, needed to stop “unnecessarily pissing people off.”

In the end it is all about efficiency as defined by the cost-benefit relationship. Easyjet attributed its success to increased efficiency, which made up for increases in airport charges and other related operating costs. Forward  booking for the next six months has improved, with more than 25 per cent of capacity sold. The plane is achieving a 90-per-cent load. But the industry is far from being stabilized, with new concerns over political unrest in Eastern Europe, the Middle East and Africa, and the Ebola scare.

In summary, Ms McCall said: “We have to understand the economics.” But, of course, with one caveat that neither Air France nor Easyjet can refute: It is the customer that decides, full-service or low-cost. In a way, Easyjet seems to understand what its customers want. One asks, Does Air France, noting how the aviation landscape has changed? If expanding Transavia’s operations is a positive move, has Air France the gumption = and right formula – to press on and succeed?

This article was first published in Aspire Aviation.