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Chinese Airline Brands Take Off as Americans Hit Turbulence

29-Apr-2018 | Source : AG-IP News | Visits : 4588
LONDON - Chinese airline brand values are taking off as they spread their wings with greater growth beyond the domestic market, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. China Southern (up 10% to US$4.1 billion) remains the Chinese brand leader, ahead of China Eastern (up 21% to US$3.8 billion), and Air China (up 19% to US$3.4 billion). In a reflection of the eastward-movement of the global airline business, British Airways (down 6% to US$3.5 billion) fell down the ranking to 8th place, behind two of the Chinese brands and only narrowly ahead of Air China, according to Brand Finance.
Meanwhile, American Airlines remains the world’s most valuable airline brand, despite its brand value falling by 7% to US$9.1 billion. The other big, full service, US airlines each endured bumpy skies, including second-ranked Delta (down 6% to US$8.7 billion) and third-ranked United Airlines (down 2% to US$7.0 billion).
The trio of big American airlines have each failed to grow their brand values as they suffered from a series of larger macroeconomic challenges in a post-consolidation phase. In addition, they have been beset by higher fuel costs and a number of flight cancellations caused by storms. Meanwhile, the rise of social media has allowed unhappy customers to share a number of stories that have spread virally, but this does not appear to be causing significant long-term damage to airline brands.
David Haigh, CEO of Brand Finance, commented:
“In the airline market, customers are making decisions about brands on a very narrow range of factors: price, routing, and schedules. Despite big viral news stories which gained media attention globally affecting several brands, in the airline business, it is reliability on delivering core services that customers find key in taking purchasing decisions.
Consequently, the Chinese brands are the big winners in this area as they have been able to grow their brands by giving customers greater confidence in their dependability and safety as they grow alongside the Chinese economy.”
Aeroflot Remains Strongest Airline Brand
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand. Aeroflot (up 13% to US$1.4 billion) remains the world’s strongest airline brand with AAA brand rating driven by consistently strong brand equity, built up through investments in its brand and marketing promotion in the Russian and key international markets.
Lufthansa Takes Flight to Enter Top 10
Lufthansa (up 29% to US$2.9 billion) became one of the world’s ten most valuable airline brands over the last year, on the back of being the fastest growing brand value amongst the top ten. Lufthansa benefited from a contraction in airline capacity caused by the collapse of Air Berlin, which reduced the competition that the brand faced in central European markets. These broader issues combined to boost the Lufthansa brand, which represents a bounce back from difficulties in 2015 and 2016, when the airline experienced a significant fall in consumer sales.
Qantas Leads Point-to-Point Shift
The global airline market is being reshaped by the development of ultra-long-distance aircraft, with greater fuel efficiency and smaller load capacities allowing more direct long-haul flights. This is demonstrated by the introduction of point-to-point flights by Qantas (up 1% to US$2.0 billion) between Australia and the UK. The number of international flights in Asia to second and third-tier airports is also growing, as operators like AirAsia increase fleets and develop new direct services.
Emirates First in Middle East despite Macro Challenges
With direct flights undermining the hub-and-spoke model favored by Middle Eastern airlines, and due to broader geopolitical issues, the three largest brands in the region decreased significantly in value. Ranked 4th globally, Emirates (down 12% to US$5.3 billion) remains the most valuable airline brand in the Middle East, ahead of Qatar Airways (down 11% to US$1.9 billion) in 16th place, and Etihad (down 11% to US$1.4 billion) in 25th.

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