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by • 1 July, 2009 • CONSUMER INSIGHT, TRAVEL / HOSPITALITYComments (0)1551

BRIC Travel Marketing: Business-Class vs. Budget Air Travel in China and Beyond

– R.D. Eisenhart III, reisenhart@criterionglobal.com

Domestic air travel in China, once subject to tight government regulation and closed to foreign operators, is quickly entering a new era of greater competition for marketshare in both business-class and budget travel segments. Meeting the demands of these business-class and discount consumers presents challenges for both domestic and foreign air carriers, both established and new to the Chinese market.

International airlines are increasingly adapting to accommodate the cultural preferences of the Chinese business-class air travel consumer. Those who can do so effectively will be well-rewarded. For many business travellers in China, quality of service is the only factor determining whether that customer returns or not, and despite the economic downturn, experts note that Chinese business travel continues to remain strong. Still, this elite business-class community represents only a small portion of country’s total population capable of flying.

Although China’s middle class have yet to move towards international travel en masse, it seems only a matter of time before they do. Domestic airlines in China are expected to increase passenger travel by 10 million, for a total of 170 million passengers, in 2009, the majority of which shop by price alone, regardless of brand preference or quality of service. Discount airlines, such as Spring Air, are meeting this demand, and have even considered offering customers “standing room only” tickets at a 20% discount to meet demands according to Sky News. Despite the shock value of this prospect, Spring and other private air carriers continue to perform well next to state-backed airlines, known for exceptionally high ticket prices combined with “notoriously low levels of service and efficiency.”

The state of the Chinese airline industry is clearly in flux, and will most likely remain that way for some time. Despite the growth of the airline market, the industry faces competition from railway transport systems: at the moment China’s railroads are the 4th busiest in the world, with plans to build up to 120,000 kilometres of railroad by 2020. Which industry will win in the end remains to be seen, but at the moment it seems likely that the ultimate winner will be decided by the industry that can provide the cheapest and fastest means of travel.

In other emerging markets, such as India, extensive but overcrowded railway systems have contributed to the popularity of cheap air travel. In Brazil and Russia, a lack, or dilapidation of railroad infrastructure has lead to the emergence of discount domestic airlines such as Brazil’s Azul and Russia’s Sky Express. Where the railroad was once considered the backbone for industrialization as well as a unifier in India and China, its absence in Brazil and dwindling presence in Russia may hinder national progress across either nation. The replacement of the railroad with airlines could further cement the hub and spoke relationships between the big cities and their smaller counterparts, hindering even development universal development within these nations.

For more information on BRIC marketing strategy, or our media planning/media buying work for airlines, and travel/hospitality brands, visit us online, or call our offices directly +001 646 330 4673!

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