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US Airways suing for lower prices
A recent Miami Herald headline - "US Airways sues Sabre over pricing." According to the article US Airways isn't the only airline, American has a suit pending as well.
Airlines pay Sabre and other airline distributors a fee for selling their tickets. In the suits the airlines are alleging that the fees are too high. Sabre's position is that it provides value in the form of significant corporate travel bookings.
The Real Problem - Branding
The airline industry, with the exception of Southwest, has done a miserable job of branding itself. If you doubt that, choose any airline (other than Southwest) and tell me what makes them better than the rest. You can't, can you?
It's this lack of clarity about what customers can expect from them, the brand promise, that keeps the airline industry competing on price. Most companies find that competing on price requires them to continuously look for cost savings. As you might expect, some of their highest costs are associated with vendors who have branded themselves well.
Most companies with a solid brand get premium prices. Their higher prices support and reflect the value claims they make. It's also the reason why they don't feel compelled to negotiate with companies that don't have that brand strength.
What's the Solution?
These airlines should take the huge sums of money they're going to spend on legal fees and hire someone to help them develop a powerful brand - one that will attract the most profitable fliers to their airline. Then deliver handsomely on that brand promise. (Stay tuned. In a future post we're going to discuss the airlines again on brand delivery.)
The Lesson
Whenever you:
- Feel pressure to lower prices.
- Need to find cost savings to survive.
- Want to blame others for your misfortune.
It's time to revisit your brand. Have you:
- Diminished your brand by trying to serve too many people?
- Failed to deliver on your brand promise?
- Lowered your prices to gain 'market share?'
- Added products/services that don't fit your brand?
- Stopped emphasizing your brand?
All of these will diminish your brand image and the prices you can get for your offerings. If you've fallen into any of these traps, instead of blaming others, or filing suit, focus your attention on establishing or reestablishing your brand. It's the only effective solution to the problem you're facing.
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