In the sixth and final article in this series exploring Air Services Development, Gavin will address how tourism boards can measure the success of their co-operative marketing campaigns with carriers, and be able to showcase back to ministries and government offices the benefits of working with the supply and supporting demand generation in a coordinated way, rather than just blanket destination promotion.
Gavin’s previous roles have included development in British Airways, as well as consultancy projects for United Airlines, American Airlines, Qantas, and supporting the development of low-cost airlines to touristic destinations. Gavin has held a Board Position (CCO) at Portuguese airline SATA International and has been the advisor to the Board of Visit Portugal on air connectivity.
As a professor, Gavin is responsible for programs spanning the commercial aspects of aviation and airports and works closely with Aeroclass on executive courses, bringing DMOs and airports together for tailored learning programs that support route development for destinations.
The key to a successful plan and program is the setting of goals, and when developing goals for Air Services Development, the SMART objective strategy (Specific, Measurable, Attainable, Realistic, Time-bound) can be followed perfectly. Objectives are the specific measures that can be used to determine whether or not you are successful in achieving the goals.
With this in mind, what are the objectives of good route development? Is it just about attracting new routes, or protecting and managing existing services? Overall, the goals of each air service will be different based on a variety of factors including market size, existing services and route leakages, as well as the size and scope of the destination and its offer.
In a nutshell, the following are outcomes of a successful air services program:
- Retaining existing service – being in a position to ensure we keep the two-weekly or daily service, and ensure the route is served all year
- Adding service to a new destination – seen by many in the industry as the catalyst of a successful air services development program: the ability to seek a new route to a new destination
- Adding frequencies to current services – for tourism boards, it is not always the case that new flights can be offered by carriers. However, the ability to add more flights on the same route is a successful outcome and can be a way to grow inbound tourism numbers
- Lowering fares through introducing a new competitive service – the rationale for tourism boards here being that the existing service is not supporting the development of certain segments/tourists to the destination as the prices on the route are aimed at a segment that is not conducive to new tourism development. Thus, the introduction of an LCC (low-cost) carrier to an existing route will bring fares down and potentially raise touristic disembarkations
- Improving service reliability – this is not route development per se, but rather ensuring from an airport and destinations perspective that a more robust, operationally-focused strategy to bring a carrier that supports the vision of the airport, and ensures a reliable and competitive service
- Upgrading aircraft – similar to enhancing frequencies, the key goal here is not based on more flights but rather on having more seats on offer, the rationale being that the route can withstand more offer at certain times of the year. This could be a great way for destinations to look at tourism enhancement during the high-season periods – not about bringing new frequencies to a heavily-congested airports where slots are not available, but bringing more potential tourists on existing services if carriers are able to up-scale the aircraft
- Increasing access to global networks – focusing on the airline-related ‘hub and spoke’ model, the importance of air services development under such an approach is to have the local airport connected to a larger, international-focused network. For tourism boards this means that passengers can arrive to the destination on a ‘one-stop strategy’, particularly when the passengers from multiple markets may not warrant a direct service but will support enough people to serve the sector originating from the hub
Building vs. retaining routes… Both are key
Engaging key stakeholders and community members at the onset of such air service development efforts can help reinforce the understanding that route connectivity best works when seen as a community exercise and not just a matter in the hands of the airport. Therefore, when a community is effectively engaged, expectations for ASD goals can be more realistic and buy-in can be increased across many stakeholders, not least the tourism board, chambers of commerce and private stakeholders.
During this series of articles, we have often mentioned the importance of an Air Services committee, whereby its members are drawn from across the different stakeholders and one common theme is to work on a coordinated method to communicate with airlines, assisting in the ‘why we think you should fly to our airport/destination’ approach.
Overall, the effectiveness of an air services program can be measured by knowing and understanding the objectives, measuring outcomes and attributing causation. It is that level of detail that is needed to ensure we showcase to our different stakeholders just how well our effort with connections is enhancing the airport/region/destination accordingly.
But as highlighted in the points above, ‘the new carrier, the new city’ is not the only measure of success. They are certainly the two benchmarks that drive government ministers to the press to showcase how well we are doing by building such new connections, but what is key is sustainable route development, not a newspaper headline.
In essence, an airline looks at a new route across a three-year perspective. Year One is the start-up year, when most likely the carrier will have passengers (load-factor) but revenues (yield per seat) will be weak as they are contributing sales back to the route the start-up costs. Year Two should start to look better, and as the route gains traction, less monies are needed on marketing and carriers can convert good passenger numbers to a higher yield gained per seat. By Year Three it should be full steam ahead, or if revenues are not in-line with projections, then it is time to re-think whether this route really works. Therefore, a strong measure of air service success is consistency, and whether the route can stand on its own legs and not need further marketing incentives past Year Three.
With this in mind, tourism boards and the airports authority must be honest with themselves when communicating air service success. As wonderful as new routes may be, we must also ensure that continuation and growth of existing services are part of the success too in today’s highly competitive destination marketplace.
Of course, they are not as ‘headline-grabbing’, but a good route development manager in an airport, and an aviation marketing manager at a DMO, should be as proud of the things that you can’t see as much as the big wins in air service, showcasing to stakeholders that the carrier decided to stay on the route, as well as expand by adding additional seats through larger aircraft. Thus, being in a position to both build and hold routes is crucial to the success of air services today, and is part of what we can call a ‘three-pronged approach’ to air service development: i), there is the need for maintenance and keeping what you already have; ii), expansion of what is already there; and, of course, iii), growth. Overall, success in all three is much greater than just one singular victory.
Community embrace
Once the destination, airport, and broader stakeholders have established a stellar air services team, some might assume the task of route development becomes routine,balancing airline headquarters visits, air service speed-dating conferences, and regular calls with airline representatives from the airport’s home office. But truth be told, it is far from what we might call a ‘wash, rinse and repeat affair’. As each carrier will interact differently with the destination and the airport has its own unique circumstances, the need for data and informed insights takes on an even greater level of importance.
In today’s world, destinations and airports have at their disposal both historic passenger data and future sentiment analysis on what people are looking at and booking. It is the blend of the past and the future data and such tools that make the community smarter, and hence make the airlines more engaged about route opportunities and how to market new service through a customized approach. Destinations can see who is flying and what success is looking like for carriers to benchmark airports/destinations through such insights. This can then be used proactively to build the switch or complimentary route story to have a consideration of our offer. In essence, it is a partnership, and the committee work on both the supply side, working with the airlines to look at where capacity is unserved or underserved, and where they can thicken routes, increase frequency, or drive a larger aircraft under the same route itself while still maintaining the same crew cost.
So… the value explained
It’s easy to overlook the great economic impact that one airline route can have on the local destination in the grander scale of all the routes and offer we have. However, don’t underestimate the ‘think small to win big’ philosophy. In terms of air services development, some may see one airline bringing a couple of flights a week to the destination as not that important, but the reality is far from this passive notion. When you start looking at the detail of every single route, the value to the destination and local economy is quite unique.
In essence, some may say that air services are actually a destination’s single most important asset, even more important than attractions, new hotel properties and good restaurants. Having a great offer is key, but without access, such services will suffer. Thus, the economic impact of air service development is vast.
Overall, measuring air services is very much a subjective approach, but, saying that, we can try and provide some scientific proof. Let’s imagine you source a new three-weekly service all year round to your destination. What is the value?
- Three-weekly flights, all year = 156 in-bound flights
- Assuming a plane with 180 seats and 90% load-factor = 28,080 seats on the market, of which 25,272 were occupied
- Assuming the passenger (tourist) spends €250 per day on accommodation, food, drinks, attractions and stays three days = €750 per passenger destination contribution, and a grand total direct economic impact of €18,954,000 from all seats.
So, a three-weekly service can contribute to a spend of just under €19 million at the destination, and assuming now that the government taxes the touristic spend at an average of 20%, the total value of the flight to the treasury is just under €3.8 million. That is a serious amount for the country/region, proving the worth of tourism as a key economic driver for destinations. Air services development is a big business and that’s why it is so important for tourism boards to be at the table when negotiations are being made with carriers on why you should fly, thus driving the vision and supporting the carriers and reaping the financial benefits from both new and retained services.
