Written by Ludwig Duran, Strategy Director at Wolff Olins.

After emerging from an incredibly tough couple of years through the pandemic, airlines face further challenges with soaring fuel prices.

Ryanair boss Michael O’Leary has said he believes the next 12 months will be “very difficult” for most airlines after Russia’s invasion of Ukraine pushed up oil prices.In addition, long term trends show rising concerns among leisure travellers about the negative impact their holiday flights may have on the environment, and the impact on lucrative business travel as a result of the mass adoption of video conferencing technology for remote meetings. 

As government strategies shift to living with Covid-19 and countries increasingly relax travel restrictions, legacy carriers are no doubt asking themselves how to balance these shifts while looking for the fastest path to growth and recovery after the pandemic. 

Become a platform brand to capture new sources of growth

With the traditional business model of legacy carriers under threat, one approach would be to diversify into new, more lucrative and stable areas. However, for most legacy carriers this is going to be a challenge. 

Many legacy carrier brands are built like product brands, with a narrow focus on key features like price, destination selection and passenger amenities such as seat type, inflight entertainment and services. Beyond these features they often lack a big idea or clear expression of higher order values that give them the breadth and malleability to easily move into new segments in a way that is relevant and compelling for customers. 

The solution is for legacy carriers to stop acting like product brands and start behaving like platform brands. Organisations with platform brands tend to have built their brand on a big, broad idea that is category agnostic. This allows their brand to act as a platform for the company to launch new products or services outside of the category they started in.

Well established platform brands include: Uber, which is built on the thought that ‘movement ignites opportunity’ - this has allowed it to expand from its core in ride hailing to food delivery and reframe its business into a broader player in the mobility space; Google, which is based on ‘helpfulness’, a concept that enabled it expand from its advertising and search core into hardware, mobility and enterprise cloud solutions; and AirBnB which uses its ethos of ‘belong anywhere’ to go beyond disrupting the traditional leisure travel market to expand into business rentals and value-added services, like airport car services and fridge stocking for guests. 

The pivot from product brand to platform brand is already underway in the Asian aviation market. The premium carrier Cathay Pacific began to re-frame itself as a lifestyle brand built on the concept “Life Elevated”. This shift in focus is an outgrowth of Cathay’s brand expression ‘Move Beyond’ which is about the drive for progress. This focus on progress has enabled Cathay to move from pure-play aviation to curated experiences for dining, shopping, wellness, hotel stays and flights.

But it's not just the premium carriers in APAC that are making this shift. Low cost carrier AirAsia has fully reinvented its business, expanding into money transfer services, online shopping, food delivery and cloud services. Part of AirAsia’s success was in harnessing the vast amount of user data it had and centralising its services into one AirAsia app - giving customers a one-stop shop to access its new services. The other magic ingredient in AirAsia’s transformation was the equity it had built around its brand as a democratiser and disruptor of travel. This disruptor spirit gave it permission to enter the e-commerce, logistics and financial services spaces bringing with it its reputation for offering seamless customer experiences. 

The six steps to developing a platform brand 

So, how easy is it for a legacy carrier to become a platform brand? It all depends on where the brand is starting from. SWISS, for example, may find the transition easier as its brand arguably supersedes its features and instead encapsulates the essence of its home country: reliability, refinement and quality. You can see how SWISS would be an interesting disrupter for the B2C logistics market. However, this start point would be different for British Airways - as, outside of price promotions and a long-history in aviation, it's hard to discern a bigger ethos that it owns.

For those legacy carriers who may need more help transitioning into a platform brand, here are six actions to consider:

1. Develop a distinct emotional benefit 

Platform brands need a big emotive idea or point of view. This gives them the flexibility to cut across the functional differences of different categories. It also gives them a point of view to bring to those categories that explains the value they offer customers by entering them. 

2. Get your brand architecture in order

A simple, clear brand architecture helps identify gaps for short and long-term brand stretch. It can also provide a playbook to follow for legacy carriers to build their offer in new areas of stretch and indicate new innovations for the categories they already play in. 

3. Invest in the customer experience

A strong customer experience reinforces a big brand thought by connecting it to a tangible service experience that can make the different categories an airline brand operates in feel cohesive. And, if done well, as with AirAsia, the CX itself can become the value add the airline brand brings to a new category, strengthening its right to play in that category.

4. Utilise your data

AirAsia quickly identified that its vast pool of data could become a greater revenue driver by giving the team insight into how to expand and monetise its new services and products. Similarly, every major legacy carrier has a rich pool of data in the form of loyalty programmes that it could use as the foundation of its expansion into new service areas. In addition, these loyal customers tend to be bigger spenders with the airline making them a strong base to build from. 

5. Find new value through existing assets

Platform brands also help the business reframe the value it can get from existing assets. Just as Uber pivoted from driver allocation to Uber Eats using its existing infrastructure, airlines can do the same. United Airlines successfully pivoted from predominantly passenger travel to cargo during the pandemic, and is looking to continue its expanded cargo operations long-term.

6. Build a unified workplace culture

As platform brands expand into new categories, the types of talent they need to recruit can vary. The difference in skill requirements together with new focus areas can make the internal culture of the organisation feel fragmented, which can have a knock-on effect on the customer experience of the brand. Investing in a strong employer brand can unify the organisation as it grows into new areas and ensures the coherence of the brand remains intact externally.  

Brand transformation or business as usual?

Despite two years of upheaval in the airline industry, old habits and business models die hard. And, as suggested by British Airways and EasyJet executives recently, holding onto pre-pandemic business and brand models might have some merit as corporate travel - the money maker of passenger airlines - looks set to make a rebound. 

A  recent earnings report from American Express indicated that business travel transactions had reached 51% of 2019 levels at the end of February 2022. These indicators, together with IATA’s forecast that overall traveler numbers will reach 103% of pre-Covid traveler numbers in 2024, make it easy to understand why airline executives might be reluctant to undertake major brand transformation changes.

Stay resilient by thinking like a platform brand

While a recovery of the travel market looks likely in the short term - the long-term outlook is far more uncertain. Further, the war in Ukraine has demonstrated how the aviation market is highly vulnerable to market shocks. While thinking like a platform brand can’t fully protect airlines from challenging long-term trends or unexpected short-term shocks, it can help airlines become more resilient when their traditional revenue models are under threat. 

So, what can airlines do right now? The six actions above are a good place to start, but there is no need to undertake all of these at once. As with any exercise in life and business, it is best to start with the most urgent and work from there. Change is never easy but change today can make the challenges of tomorrow easier to navigate.