Thu, Dec 03, 2009
National Branding May Be Next Evolutionary Step, One Analyst
Says
While the chartering of business
jets has been around since the 1960's, it took a quarter-century
for it to reach its first important evolutionary step through
things like fractional ownership and jet cards. Now, industry
analyst Brian Foley says it's as if the industry had been
stumbling, without quite realizing it, toward its next big idea --
the emergence of branded services on a national and worldwide
basis.
"Branding adds value by differentiating what's been regarded as
a commodity service," notes aviation consultant Brian Foley
(pictured). "It both reinforces margins and profitability for
the operator and, for the end-use customer, streamlines the
decision process and relieves some typical anxieties."
Foley says charter has always been a highly fragmented sector
with hundreds of operators offering thousands of jets for
hire. Most are small businesses, regionally active but
virtually unknown beyond their immediate areas. He says that
customers who tend to worry about flying with an operator they
haven't heard of have to lean on third-party auditors to vouch for
service and safety standards. "The market's ripe for a
well-positioned player, who has the right depth and fleet, to
develop a national brand name, awareness and identity."
Recent attempts have been made to this end without measurable
success. Start-ups emerged referring to themselves as "air taxis",
a semantic twist on "charter". Thus far this has resulted in
one high-profile collapse due to undercapitalization, with several
other visible companies apparently on chronic life support. Some
have tried consolidating several smaller charter companies into a
larger venture but found the step unmanageable. "Other permutations
and combinations exist," Foley added. "But have yet to prove
themselves over the long haul."
While many fractional providers today have the necessary
infrastructure, they often require more up-front capital than end
users can afford. Their affiliated jet cards, the closest thing to
a national charter brand presence, cost more than traditional
charter. One problem is that fractional costs are driven up by
fleets with too many different aircraft types.
Foley says to create a viable national or worldwide brand would be
to find the Holy Grail of aircraft charter. "They'll need to link a
strong brand identity with ruthless bottom-line efficiency and a
truly differentiating value that actual end-use customers, not just
industry observers, can see. Various people have danced lightly
around such notions but they haven't been properly executed
yet."
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