People often talk about economies of scale increasing revenues and spreading costs, but size has another benefit: customer recognition.
This was a point raised at the Aviation Festival in London by Jayne Hrdlicka, who heads up the Jetstar Group of co-branded airlines that span Australia, Japan, New Zealand, Singapore and Vietnam. By having the Jetstar brand replicated across Australasia, it reinforces recognition of all of the airlines in the group.
Virgin Atlantic is another example. Even the airline’s CEOs have admitted that it punches above its weight – after all Virgin Atlantic only operates 39 aircraft - but the wider Virgin brand has been replicated around the world and across different industries.
Flying puts people out of control and passengers are likely to feel more secure if they are traveling on ‘a known brand.’ Therefore, it’s logical that people will be drawn to airlines who are perceived to be large and well-established.
This completes the virtuous circle, as it means that larger airlines are likely to attract more passengers and therefore better spread their unit costs. But this depends on management being able to manage the complexities of scale – and keeping things simple is never simple.
Victoria Moores firstname.lastname@example.org