25-Apr-2024 11:15 AM

What’s in a brand, where an airport is concerned?

Analysis

Branding has become increasingly important as a field of marketing, and noticeably so in the air transport sector - where airlines are no longer assessed by their 'sexiness', as they were 40 or 50 years ago, but by a host of metrics that collectively identify their 'brand value', 'brand equity' and 'brand sustainability'.

A leading brand valuation and strategy consultancy, Brand Finance, has published an annual report on how branding applies to airlines and airports in 2024.

In the former case the biggest brands by all the metrics are also the biggest airlines with few exceptions.

The same is true of airports, with a noticeable paucity of winners among small airports in the sustainability category, where some of them have actually been the most active. Most of the 'leaders' are from cities that are global powerhouses.

Meanwhile, a spat in California between two neighbouring airports over the selection of a new name for one of them demonstrates how, at the end of the day, an airport's name can be its most important feature and benefit of all.

Summary

The company 'Brand Finance' has produced its latest annual report, which assesses the branding of airlines and airports by a variety of measures.
The nature of branding in the airline business has changed dramatically away from inflight comforts and pretty girls to more pragmatic matters.
In the airline segment the biggest brands tend to be the biggest by passengers and capitalisation, but some smaller airlines (including LCCs) do creep in, in one measure at least.
Not so with airports, where primary hub airports dominate the rankings across measures and seem to be influenced by the global importance of the cities that host them.
Where sustainability is concerned, no account seems to have been taken of smaller airports that have reached the zenith of (ACI's) 'Airport Carbon Accreditation Programme'.
The conclusion is that these surveys are valuable, but need to be weighed against airport industry and public perceptions of brand strengths, which can be different.
Another conclusion is that the most important branding benefits any airport can have are its location and its name.

Branding has always been a red hot subject

Branding is a functioning of marketing, a concept that was first identified around 1500BC, and also in Adam Smith's 1776 'The Wealth of Nations', but which did not become a fully verified commercial practice until the 1960s.

Branding actually outdates marketing, having been established over 7,000 years ago in the form of symbols and engravings used by artisans in China, India, Greece, Rome, and Mesopotamia to differentiate their work. A few centuries later, in the Indus Valley, came the adoption of the term brandr ("to burn") referring to the practice of branding livestock for ready identification.

While branding cattle is no longer the practice of first choice, branding in commercial aviation dominates everything - be it the airlines and the services they offer on board and pre-departure; and the clubs they belong to, and the external services and organisations they are connected to (their alliance 'partners').

Indeed, the alliances themselves are super brands.

No longer about 'the girls'

This is manifested in numerous ways.

Price, the level of service, the route network, convenience of scheduling, associated business services, safety (passively, no airline will brag about that in case it tempts providence), even the attractiveness of the cabin crew - although that is clandestine at best these days.

At one time Pan Am hired male cabin staff almost exclusively, then reversed that policy later, as demonstrated in the scene in the movie 'Catch me if you can', starring Leonardo DiCaprio as on-the-run con-man Frank Abignale Jr, where he pretended to be a Pan Am pilot hiring (exclusively) stewardesses.

But no one ever talks about the 'Singapore Girls' like they used to.

Back in the day, in the 1970s when international travel really took off, western airlines adopted slogans like 'The World's Favourite', 'Flights so good you won't want to get off', and 'The Ritz of the Skies', while less developed countries' airlines more often took a more pragmatic approach, appealing to patriotism as the reason to choose the national carrier.

Branding has become neutralised, governed by 'Value', 'Equity', 'Sustainability' and the bottom line

The world is much more complicated than it was in the 1970s and any branding decision has to take into account the need to avoid offending anyone when people are easily offended. Hence, there is a less aggressive attitude and such slogans are rarely in evidence.

The measurement of branding today is wrapped up in finance: how much a company is worth, and designated 'Brand Value'.

Brand value is the monetary worth of a brand, if it were to be sold; the amount a buyer would pay to use a name, logo and brand identity to sell products and services, as opposed to the means of production.

Whereas brand value is a financial gauge of a brand's worth, 'Brand Equity' is to do with customer perceptions and how positive they are. Customers who prefer a brand to others and exhibit loyalty to a brand over time are contributing to brand equity.

Branding is such a huge business that there are many companies around the world measuring it and consulting on it. One of them is Brand Finance, whose 'Brandirectory' (sic) values over 5,000 brands across sectors each year.

It has released its 2024 report for airlines and airports.

Biggest airline 'brand' values roughly mirror size, scope and market capitalisation

In the airline segments these are the rankings by brand value:

Top airlines by brand value:

There are no great surprises there. They roughly mirror the largest airlines by market capitalisation and passenger numbers.

Nor is there any noticeable difference in the category 'Top airlines by Sustainability Perceptions Value' (the effort airlines put into how green they appear to be, and the public perception of it).

Brand strength category does include airlines outside the Top 10 by size, and a couple of LCCs

Where the difference is noticeable is the category 'Top airlines by brand strength' (in laymen's terms how 'good' the brand is, and the impact it has on stakeholders' actions: whether to buy the product, what price to pay, whether to work for an organisation, etc.).

That table does include several of the airlines mentioned above (but only one of the US airlines), and is headed by All Nippon Airways and IndiGo.

Also in the Top 10 table are the LCCs AirAsia and Jet2.com.

This raises questions about how branding is measured in the airport segment, and whether (for example) any airport catering primarily to budget airlines scores well in any of these categories.

The variables involved in assessing an airport's brand power are greater in number

On the face of it, the variables involved in assessing the brand strength of an airport are dramatically different from those used of an airline: which, if you wanted to be brutally cynical about it, essentially boils down to a collection of flying metal or carbon composite tubes with peripheral attachments to keep it airborne, the interior furniture, the people who fly them and serve you meals and how tasty and cost-effective they are.

In comparison, the airport is a city.

The term 'airport city' is used for a reason, because even if you don't live or work there you are subject to the vagaries of a multitude of features and benefits that confront you when you fly. Along with thousands of others at the same time - from surface arrival to check-in, to baggage deposit, to security and immigration procedures, to waiting areas (public or 'select') to FBO, retail and entertainment facilities, to aircraft boarding facilities and how long you wait before you take off.

There is far more choice to be made at each step of the journey than there is in taking a flight, and far more potential influences. And those are only the fundamental facets of the journey.

What's more, many of the services are provided by third parties, rather than the principal supplier.

So comparing the two is like apples and lemons.

According to Brand Finance's calculations the likelihood of a regional or secondary level facility even appearing in the top ratings in any category is very low, bearing in mind that both Southwest Airlines and Ryanair are in the airlines Top 10 by 'brand value'.

The Top airports by brand value (again, the monetary worth of a brand) are:

Airports with top brand value are not always the busiest ones

These are not necessarily the world's busiest passenger airports.

London Heathrow, which tops this category, once was, but was only fourth in 2023, and had fallen off the chart altogether in the two previous years.

Otherwise, the highest ranked by passenger numbers in 2023 that appear in this table were Tokyo Haneda (fifth) and Los Angeles (sixth) - the latter being the only US airport to register, even though Dallas and Denver were both above it in the 'number of passengers' table.

Shanghai literally comes out of left field as only the 22^nd busiest airport last year (in the case of Pudong), and it is one of two cities where the airports have been lumped together in the table (Paris Aéroport, which is Charles de Gaulle and Orly plus others, and Avinex, which is Shanghai Pudong and Hongqiao), while the two main Tokyo airports have been separated.

Three factors can be assumed to figure in the brand strength calculations

The reason for that decision is unclear but there are factors that can be assumed to figure in the calculations, namely:

Hub and connectivity ranking (to what degree the airport acts as a hub both in the air and on the ground);
Financial performance (market capitalisation, revenues and profitability);
How the host city rates in global impact measures such as the Globalisation and World Cities (GaWC) Index, and on the Global Power City Index.

Global influence of the host city pays dividends in airport brand ranking

That might at least partly explain why London Heathrow tops this list, London being one of only two Alpha++ cities in the world in GaWC's most recent (2020) calculations, whereas no New York City airport figures at all in the Brand Finance table - that city being the other GaWC Alpha++ city, but none of its airports being the 'hub' that is Heathrow.

(Note also that Singapore, Paris, Shanghai and Tokyo are Alpha+ cities in GaWC (out of a total of seven), while Los Angeles and Frankfurt are Alpha and Zurich is Alpha-.)

No airport in any city below Alpha- in the GaWC table figures in the Brand Finance one.

So one conclusion might well be: to find a top branded airport in this category, follow the money.

Another factor that might come into play, which is related to these global rankings like GaWC, is whether or not the airport has an aerotropolis - a region of economic gravitas related to the presence of the airport - around it. Most of the Top 10 here have that.

Turning to brand strength (to recap: the strength of the brand as measured by its impact on stakeholders and the public), these are:

Top airports by brand strength:

Singapore Changi Airport;
Seoul Incheon International Airport;
Hong Kong International Airport;
AVINEX;
London Heathrow Airport;
Tokyo Narita Airport;
Beijing Capital International Airport;
Paris Aéroport;
Bangkok Suvarnabhumi International Airport;
Tokyo Haneda Airport;

Aesthetic appeal seems to play a part in brand strength calculations

It is more difficult to get a handle on this category.

Certainly architecture, design and aesthetic appeal seem to play a major part, which is perhaps why Singapore, Seoul and Hong Kong, all modern airport facilities with user-friendly features fill the top three places, while London Heathrow, which is (let's say) not as well known for them, is a little further down the list, although not that far down it.

Bangkok Suvarnabhumi International Airport makes an appearance in this list - an airport that was operating at capacity from the day it opened, but at which serious attempts to alleviate that situation have been made recently (and continue).

Again, there is no explanation as to why some airports have been put together under a general corporate or city heading while others are treated individually.

No airport dedicated to a specific market segment appears in the brand value and brand strengths lists

But the biggest concern must be that no airport dedicated to a specific market segment appears.

It would be difficult to find a cargo airport that merits a brand ranking at this level, and in any case, some of these passenger airports are globally important for freight too, like Hong Kong.

But not so in the case of 'low cost' airports, one would have thought.

For example, Kuala Lumpur International, the site of the 'KLIA2' budget terminal (built at great expense) mainly for the use of AirAsia (Capital A Berhad) might have come into the reckoning, along with London Stansted Airport. Both are very strong brands in the eyes of the public.

The usual suspects return to the 'Sustainability' brandings list

Turning to the final category, branding by 'Sustainability Perceptions Value', while some small airlines made it into that Top 10 table, that is not the case for airports.

In fact, it is very much a case of a return to the old guard, those that appeared in the Brand Value table, the only difference being a slight variation in the order.

Top airports by 'Sustainability Perceptions Value':

Again, how this table is justified needs explanation.

The 'C-Word' dominates sustainability

Where airport sustainability is concerned everything hinges on the C-word: Carbon.

The ultimate arbiter of preparedness to eliminate carbon to 'net zero' by 2050, or whenever (it can be sooner), is Airport Council International's (ACI) Airport Carbon Accreditation Programme (ACAP).

This is divided into five main levels, and the Gold Standard for such levels of sustainability is Level 5.

Airports at this level must collaborate with their entire ecosystem, including employees, suppliers, business partners, airlines, as well as other companies and third parties active on the airport site to contribute significantly to emissions reduction, aligning with the broader Net Zero commitments of the sector.

None of the listed airports has reached Level 5

Not a single one of the airports in the table has yet reached Level 5 in the ACAP, although a number of them have achieved Level 4, including Seoul Incheon, Hong Kong and Zurich.

And all the 10 airports at Level 5 are in Europe, except for Christchurch in New Zealand, and none of them is a primary level airport. All are sub primary or secondary level in nature, and while none specialise in handling LCCs, those airlines often make up a large part of the capacity.

ACI: map of Level 5 accredited airports in the ACAP

While no one would expect any of these airports to generate high brand awareness beyond their immediate region for their sustainability efforts, it does seem unreasonable that they should be overlooked altogether in favour of much larger airports, which - comparatively speaking - have done quite a bit less in this area.

Brand assessments of this nature need to be considered together with alternative ones that have a broader scope

In summary, although tables of this variety are very useful to assess brand awareness at the highest levels of airport activity, it carries at least equal value to compare them with results emanating from alternative sources such as the ACI ACAP and the airport service quality assessments published by Skytrax, JD Power and others. Those invariably take into account the claims of airports operating at different levels, and which deserve recognition.

Oakland Airport wants to make a name for itself, but San Francisco seeks to protect its good name

The real power of a brand may lie as much in the airport's name as anything else.

CAPA - Centre for Aviation has produced several reports on airport naming, and links are provided at the end of this report.

The most recent of them was on Oakland Airport (OAK) in northern California, which was considering a name change, but without ditching 'Oakland' from the title as it sought broader recognition of its position in Northern California's Bay Area around San Francisco.

Oakland opted for 'San Francisco Bay Oakland International Airport', which is an accurate description geographically. Oakland is actually on the east side of the bay, which is long established as the 'San Francisco Bay Area' - a region in Northern California spanning the city of San Francisco and surrounding counties.

The intention seems to have been to create a mindset that connects Oakland positively with the perceived delights of San Francisco, a city that is easily accessible from Oakland (which is an important low cost airport, with 93% of capacity in that segment compared to 11% at San Francisco International).

Recently the Port of Oakland released the results of a survey showing that "local residents are comfortable" with modifying the name of the airport accordingly. It added that the airport "has done extensive research and interviewed airline executives to determine why OAK has not been able to sustain many of the new routes that have been launched over the last 15 years...it demonstrated that a lack of geographic awareness is a significant reason for these challenges".

But the City of San Francisco has said that it plans to take legal action should Oakland International Airport proceed with that potential name change, because of "the immense confusion and chaos the renaming would cause for travellers and consumers generally… (and that) this proposal also infringes on [San Francisco International Airport's] trademark."

The City's Attorney said, "We want to see the entire Bay Area thrive as a tourist destination and expand our offerings to visitors, but this proposal is not a legal or practical way to go about it".

The legality is not in question here.

What is being scrutinised, and has been scrutinised, is why two airports serving broadly the same area but with contrasting business models cannot work together to achieve benefits that benefit both equally.

All airports lead to London

London, UK, has six commercial airports, all carrying the name 'London' in their title. Each of them is owned by different entities, predominantly but not exclusively from the private sector, and only one of them is actually in London. The furthest out (Gatwick) is 55 miles (88km) away from Trafalgar Square, while two others are in excess of 40 miles (64 km).

All of which leads to the conclusion that the real strength in a brand where airports are concerned is in the location and the name.