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Thursday, January 17, 2008

Pricing and branding -- airline style

In August, 2006, Toronto blogger Thomas Purves wrote this entry: Porter Airlines or How to throw a smashing launch party. Many observers at the time thought the Porter would not survive in the hyper-competitive airline industry. Porter has succeed in building its brand and avoiding some of the price competiton excesses of its competitors.


Today, I'm heading to Toronto to research a feature about Porter Airlines and BECC Construction. Porter is currently a regional airline serving Ottawa, Toronto, Halifax, and Mont. Tremblant. (The Halifax and Mont. Tremblant routes are weekend services designed to use capacity that would go wasted on weekends when there are few business travelers between the major Canadian cities.

Porter uses fuel-efficient turboprop airplanes and operates from a terminal at Toronto City Centre Airport, a unique landing spot in lake Ontario. The airline uses a ferry to transport passengers the short distance between the Island and the mainland.

When Porter Airlines launched about a year ago, many people thought it would never survive. Competition in the airline industry is fierce, and its Island Airport location has stirred much local controversy -- especially since Toronto's mayor vowed to stop a planned bridge connecting the airport to the mainland. As well, naturally, competitor Air Canada did not much like the idea, especially since it had lost its access to the Island Airport for a limited service when Porter arrived on the scene.

But Porter has done many things right in differentiating its brand and product. It offers real service -- coffee in china cups and a glass of wine in a real glass -- and a comfortable lounge at the airport where you can use Wi-Fi Internet, snack, or enjoy a non-alcoholic drink. And the airport location is certainly convenient -- just minutes away from Toronto's business district and connections.

Nevertheless, the Porter project is exciting for its larger vision -- Porter plans to soon start services to U.S. destinations and other Canadian communities, using its Toronto hub as a base. And this expansion requires additional space and services -- the topic of course of our special feature.

As blog readers know, I am reasonably creative when it comes to airline travel -- figuring out ways to travel first or business class for the lowest fares possible. I'll even travel economy when it is cheap enough -- in one classic case a few months ago, Air Canada in a price war with WestJet charged me minus seven dollars to fly from Ottawa to Toronto. (That is right, they effectively paid me, before taxes, to use their plane.)

But, considering the story, the only right thing to do in this case is to Fly Porter. There fares are reasonable, but not the cheapest -- I would save a little money by using Air Canada. When I told the Porter spokesman about my "minus" fare with Air Canada, he laughed, and said Porter knows about this stuff, and isn't interested in playing that game.

This is absolutely the correct strategy business-wise. Porter is differentiating its product -- it has exclusive rights to the Toronto Island Airport -- and service levels; it isn't gouging its passengers; you can certainly receive top quality service without paying super-high fares. It is also creatively managing its capacity, using its planes on niche or under served routes when its business schedule allows.

I'll share more insights tomorrow -- note however, here how effectively Porter has achieved its brand success; while I've read about the airline in the general media, and used it a few times, I will only have the fuller story once my interviews are completed today. But, with the freedom the blog allows -- you can see how successful Porter has been in achieving and maintaining its Brand. Can you do the same for your own business?

2 comments:

John Tantillo "The Marketing Doctor" said...

The fact that the airlines are acting in unison (i.e., most are adding charges and cutting capacity) makes individual airline brands seem even less important. Of course, people have been thinking airline brands less and less over the years anyway and more about what schedule works best for them. This might just be the final straw. Just watch what happens when (not if!) the airlines start playing around with frequent flyer benefits –probably the last brand loyalty component left!

Publisher1 said...

True . . . which makes the Porter story exceptional. Assuming all is what it seems (and I realize that things aren't always what they appear to be), Porter appears to be defying the norms of the airline industry in its current state, and surviving. (How many airlines do you know where you have to take a ferry to get to the terminal building?) But it uses fuel efficent aircraft, and the unusual "island airport near a city center" gives it some unique selling propositions -- then it lays on the types of service cut from most economy-type airlines, and it has the basis for viability and solid branding.