Airline market research – basic tools

Airline market research is a complex process which generally may consume a lot of resources. However, it is crucial for a properly constructed airline business plan and can make all the difference between an airline’s success and failure.

Depending on the overall airline business model which is chosen for a given airline (I have written more on airline business models previously) the market which needs to be analyzed for your airline market research can be really one of two things:

• A society (regional, national or specified even differently)
• A set of businesses (companies, who will be the airline’s main or only clients)

Depending on which of the two markets and airline is going to approach, the tools and techniques used for the airline market research will be slightly different. Also, in my opinion, the second option is much easier from a researchers point of view, but it only works with carefully chosen niche markets.

Let’s first take a look at market research for a specific society of people whom an airline believes to be potential customers. There can be a variety of societies approached and here are just a few examples:

• All people from a given country going overseas for holidays
• All business people who travel extensively in business matters to two neighboring countries
• All immigrants (from our country) who choose to make their life in selected few other countries
• All immigrants entering our country
• All transit traffic which is using our country as a transit point (for instance from the Far East to Western Europe)
• Many more

When doing the airline market research, you need to specify which groups may be of interest, research them thoroughly and come up with one (or maybe two) groups which seem best suited as target customers.

The main things which need to be evaluated for the groups you initially choose as potential hits for your airline market research are the following:

• The overall number of people in the given group
• What percentage of the group will be likely to travel by air?
• What percentage of the “air” group is willing to try and perhaps commit to a new carrier (i.e. how many are flying with the competition and how many of those are willing to switch over)?
• What would be the incentive for those people to switch carriers?
• How wealthy is the standard person in that group and what percentage of their money (or what specific amounts) are they willing to spend on air travel?
• Will the amount above be sufficient to cover your costs and generate an adequate level of income?
• What are the general trends in the travel habits of those people? Will they be travelling more each year, less or is the flow of traffic quite steady?
• What kind of travelling do those people prefer? Would those be generally holiday trips with people coming back after about two weeks from the inbound journey, or are those rather business trips with an overnight stay?
• What sort of service do they expect on board?

As you can see, there are many questions which need to be answered during an airline market research and the list above is by no means exhaustive. As a matter of fact, the actual questions you will need to ask yourself depend largely on the specific group and the service which your airline intends to offer.

The airline market research as outlined above can be performed in a variety of ways and probably none of them will give you guaranteed, ready to use and reliable results. This is the general problem with market research – it provides rough estimates, sometimes quite accurate, but it will never be able to guarantee anything.

It is a bit outside the scope of this short article to outline main airline market research tools, but as a minimum you should probably look into:

• Consulting your countries (or the countries of origin of your potential passengers) national tourist office. They have statistics of travelers from and to a given country with a lot of additional data.
• You can try to create a poll which can be distributed to potential passengers. This can be performed at airports where they arrive or depart or in other places.
• Try to get in touch with the embassy of the country from which your customers may be coming. They also have knowledge on the amount of immigrants as well as leisure and business traffic and they will probably be quite keen to help.
• Hire professional airline market research companies or a global consulting company to do the work for you (this is probably the most expensive method).

At the beginning I promised to go over the airline market research for airlines which aim to work with companies and corporations rather than single passengers. Those would be mainly charter airlines (because they deal primarily with tour operators) and regional airlines which either work with specific corporations (often in order to deliver their employees to and from their workplace) or a subsidized by local governments to provide air connections to regions in which normal airline operations would not be economically viable.

In both those cases, the original airline market research can be generally done by doing a thorough internet search (for instance for government tenders on air transport) and specific information would most likely be obtained through direct interaction with potential customers. Such deal generally require some time to get off the ground, but can be really rewarding and lead an airline to know quite precisely what to expect from its customers.