club catalyst. On palaces with wings ...

I had the privilege of participating in the launch event of India’s newest full-service airline, Vistara, earlier this month. I was at the Mumbai airport to welcome the first passengers at the check-in counter, and to receive the incoming inaugural flight from New Delhi. The new aircraft came gliding in, like a large, elegant, majestic bird. Its tail was painted a wonderful purple, with the Vistara star logo, which reflects the unbounded universe. Suddenly, two water cannons threw huge jets of water into the air, showering the new aircraft with a wonderful parabolic salute. This is apparently how the first aircraft of a new airline is welcomed into an airport. It was a memorable moment.

Later, reflecting on brand Vistara, I was struck by the words ‘full-service airline’. What does this phrase mean? In India, Vistara is described as a full-service carrier, as are Jet Airways and Air India. Globally, brands such as Singapore Airlines, British Airways, Emirates, Virgin Atlantic and Etihad Airlines have distinguished themselves as successful full-service airlines. Contrast this with the words ‘budget airlines’ or ‘low-cost carriers (LCCs)’ which are variously used to describe other airlines such as Tiger Air, Air Asia, Indigo, SpiceJet and the aptly named Vanilla Air of Japan.

What is the real difference? What constitutes a ‘full service’ brand in the airlines industry? Why do so many passengers prefer to fly by full-service airlines when budget airlines offer cheaper tickets? Clearly, the answer is that these passengers see value in paying a premium price to fly full-service. But where does such value come from? Here are some possible answers.

Flying is often a stressful experience, particularly for frequent travellers. Aircraft are not the most hospitable places on earth. Seats are cramped with little leg space, there are frequent changes in air pressure, flying causes dehydration and discomfort, and there is, of course, the overall anxiety associated with reaching the destination comfortably and on time. Full-service airlines mitigate the stress of flying by offering simple additional features that relax passengers.

A nice hot meal offered on board is often an excellent way to relax and forget the stress of being holed up in an aircraft. More leg space, at least relatively speaking, ensures a more comfortable flying experience. In-flight entertainment, including music or movies, helps keep stressful feelings at bay.

An extreme example of a full service airline which provides relief from stress is the popular in-flight massage offered by Virgin Atlantic Airlines. Recognising its appeal, many other airlines have quickly followed suit, offering short yet relaxing massages in their upper class lounges.

For specific traveller segments such as children and elderly people, full-service airlines perhaps play an even more important role. On long flights, services such as child-friendly headsets, play kits, entertainment channels, special meal services where kids do not have to unduly wait for their lunch or dinner are likely to be very important for parents who want their children to travel without crying all the way. Air New Zealand has even offered freshly made pizza on some of its flights, which has, of course, kept the kids happy and peaceful.

Similarly, many of us would not want our elderly parents to travel in the discomfort of tightly packed seats on low-cost carriers. At their advanced age, many of them are also likely to be afflicted with health problems, which makes comfortable travel even more important. For these specific passenger segments, therefore, the willingness to pay a reasonable price premium for full-service airlines is often quite high.

A large number of flyers belong to the corporate world. Typically, they are sales executives travelling to visit markets, or CEOs on their way to important meetings, or supply chain officers en route to visit vendors. These are people who are likely to be very busy on either side of their air journey. In such cases, the journey itself serves as a cocoon for these passengers to temporarily disconnect from their ultra-high pressure worlds, to think at peace, unwind, eat, drink, and even sleep.

Full-service airlines offer the facilities to enable this. Particularly in their first class, business and premium economy classes, they provide luxuries that create a wonderful cocoon to unwind and be in one’s own private space. Better known “cocooning” features on domestic full-service flights include seats that recline significantly, plush leather upholstery that you can sink into, headphones that neutralise all external noise and a relaxed three-course meal.

On international flights of longer durations, this cocoon effect becomes even more important. Corporate passengers want to work in silence on their laptops, or read a book, or catch up on a recent movie, or eat a full meal slowly (which, on a normal working day, few corporate types get to do), or sleep very well. In response to these needs, full-service airlines offer entertainment systems with a choice of several movies and music channels; fine wines, beers, spirits and a choice of hot plated meals; plug-in ports for computers and iPads; flat beds in upper classes; and, in first class on Etihad Airlines, even fully stocked personal mini-bars, so that the passenger is not constantly interrupted by a steward serving drinks.

For this segment of consumers, this cocoon is an integral part of the overall journey. Hence they are quite willing to pay a fair premium for travelling by full-service airlines which have all these services on offer.

Somewhat adjacent to the above consumer need, but quite distinct from it, is the desire to live it up in the skies. This desire can be quite strong for segments such as upper middle class couples proceeding on their cherished annual vacation, or the very niche segment of very affluent people who cannot yet afford their personal jets.

Full-service airlines jump in with a flourish to fulfil these expansive needs. So Malaysian Airlines, for instance, offers a “chef on call”, and serves caviar and lobster on its upper classes, accompanied by the exquisite Dom Perignon 2002. Similarly, Emirates Air offers gourmet espressos on board, and also luxurious shower spas. Asiana Airlines and some others provide live in-flight entertainment, including expert violinists who will play music of your choice in the aisles. Kit bags gifted to passengers come filled with designer Givenchy socks and Salvatore Ferragamo moisturisers.

These passengers, who regard the aircraft they travel by as “cruise ships in the air”, are also willing to pay for this wonderful experience.

Cutting across all these consumer segments, full-service airlines also offer some essential “comfort” services which many passengers value, but low-cost carriers don’t necessarily provide. Some of these include adequate free checked-in baggage allowance, superb service at the point of check-in and on board, and a frequent flyer programme.

All these features, some tangible and other intangible, together constitute significant overall value in the passengers’ minds. Why else would millions of passengers be willing to travel full-service and pay a higher fare?

However, meeting these consumer needs entails significant additional costs. Therefore, to ensure commercial viability, full-service airlines have to keep all other non-consumer facing costs firmly under control, and have to learn to consistently command a fair price premium in well defined consumer segments, so that they can invest in providing their passengers many of these special features.

As the full-service airline market in India heats up with the arrival of its latest entrant, it is clear that passengers can now look forward to many more palaces in the skies.

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