FOCUS AIRLINES;AIRLINES' NEW IMPORTANT STOP-ASIA;MARKETERS SEE DEMAND UNPARRELLED IN THE HISTORY OF AIR TRAVEL

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[hong kong] By the year 2010, more than 50 percent of the world's 736 million international airline passengers will be flying to, from or within the Asia-Pacific region. Some industry observers believe these International Air Travel Association projections are conservative; and these estimates don't include mainland China.

Six new major airports, each with a capacity of 25 million passengers a year, are currently being planned or built in Asia, according to Travel Business Analyst, a Hong Kong-based consultancy. These will serve Seoul, Hong Kong, Shanghai, Guangzhou, Kuala Lumpur and Bangkok.

DOMESTIC GOES INTERNATIONAL

In addition, Asia's domestic airlines are increasing their international routes. Two of Indonesia's airlines, Sempati and Mapati, are now flying to other Asian countries . The Philippines' Grand Air has started flights to Hong Kong. And governments in Malaysia and Thailand have given the green light for new international airlines.

Established airlines in Asia are approaching the crowded new environment in ways as diverse as the passengers they carry and the maturity of the markets they serve.

For example, Chinese airlines are focusing on basics like polishing up their safety image. In the Philippines, newly privatized national carrier Philippine Airlines aims to become a world-class carrier by 2000. The once-bankrupt carrier is revamping its corporate culture, its image and its marketing strategy. Its aim is to double passenger capacity and revenue by the turn of the century.

DOM PERIGNON, ANYONE?

Meanwhile, world-class carriers like Singapore Airlines are pondering the merits of adding Dom Perignon to the menu and procedures to speed service. And in Hong Kong, Cathay Pacific is supplying luxury limousine services to ensure continued loyalty of its high-end customers.

The more competitive the airline business gets, the more concerned airlines are with loyalty, said Ron Mathison, Cathay's manager of loyalty programs. "It's no longer enough to have a good product and brand," he said. "The more people fly, the more they crave attention, special service and service-related benefits."

LOYALTY, NOT PRICE

Loyal customers tend to be less price sensitive, he added. Maintaining current customers makes good business sense. Mr. Mathison said the cost of a new sale is five times the cost of maintaining existing clients. About 25% of Cathay Pacific's revenue comes from 5% of customers.

Cathay has a joint frequent flier program, Passages, with Singapore Airlines and Malaysian Airline Systems. Launched in 1993, Passages has 415,000 members.

New information technologies are driving much of Cathay's marketing strategies. "IT has created a whole bandwidth of excitement," Mr. Mathison said.

Using targeted marketing on a mass basis, Cathay is able to deliver what Mr. Mathison calls "the corner store mentality. We know who you are, and we deliver what you want, to a lot of people," he said.

MARKETING ON THE WEB

The airline also markets through the World Wide Web (http://www.cathaypacific-air.com) and e-mail. Smart cards, electronic and remote ticketing and self-service check-in are being explored, as well.

Cathay Pacific's latest programs are part of a seven-year project to reposition the airline at the "heart of Asia"-the phrase used in the company's global advertising.

"We are positioning ourselves as an international airline based in Asia," said Charlie Stewart-Cox, Cathay's former manager, marketing communications, now promoted to a corporate job at its parent company Squire. Historically, Cathay was seen as an airline for expatriates traveling around Asia.

The final phases of the new plan will coincide with the opening of Hong Kong's lavish new Chep Lap Kok airport in 1998.

REFLECTING CHANGES

The aim of the repositioning is to reflect the changes in Cathay's customer base and its increasingly Chinese ownership. Currently, 80% of its passengers are Asian and 45% are ethnic Chinese-a new demographic reflected in inflight entertainment systems and menus.

If Cathay Pacific represents one end of the Asian airline spectrum, mainland Chinese airlines represent the other. In 1994, IATA pinpointed the People's Republic as one of the most dangerous places in the world to fly. But in July 1996, the Civil Aviation Administration of China proudly announced that mainland airlines had flown for 24 consecutive months without crashing.

In the middle of the spectrum is Korean Air, one of the world's top 10 airlines, which in May celebrated carrying 40 million passengers. Ogilvy & Mather handles its global ad campaign, which focuses on positioning the airline as a worldwide carrier.

Asiana Air competes with Korean Air, boasting better service. Euro RSCG Ball Partnership, Hong Kong, handles Asiana's overseas advertising; Sang-Am Communications is in charge of domestic campaigns.

ADDING ROUTES

Both South Korean carriers constantly are adding new routes and mounting marketing campaigns in Asia, Europe, North and South America.

"You will see Korean Air's expanded presence in coming years," said Ha Man-Kee, the airline's director of marketing. "To do that, we plan to continue increasing our ad budget, especially for first-class and other prestigious [travelers]."

Meanwhile, national carrier Malaysian Airline System is using executive secretaries in an attempt to get their bosses into first-class seats. This grassroots push will be backed by advertising, according to Tajudin Ramli, the airline's chairman. Non-Asian airlines also are going for a share of the region's travel pie.

THE `CARING' AIRLINE

For example, British Airways is repositioning as an airline that is "caring." Asian icons, such as the Peking Opera, appear in a worldwide campaign by M&C Saatchi, which broke earlier this year. Global ads are tailored for specific Asian audiences.

Research efforts also are intensifying. Angela Pih, M&C Saatchi Hong Kong account director, says BA is conducting increasingly detailed research into the hopes and ambitions of different age groups in Asia. "We want to make sure we understand [our customers]," she said. "We found that our target audience wanted to see themselves portrayed."

In BA's latest Club World (business class) campaign, the Hong Kong print ad shows a mature Hong Kong executive's head and shoulders atop a baby's body being cradled in his mother's arms. For Korea, a picture of a much younger Korean executive is substituted. Ms. Pih explains that Korean executives who would consider flying on a foreign carrier tend to be much younger.

Asian leisure travelers are another target for BA. The relative youth of Asian travelers is central to its marketing strategy.

"Independent frequent travelers who plan their own holidays rather than join group tours tend to be in their late 20s and early 30s," Ms. Pih said. "They are destination driven."

QANTAS' FOCUS IS LOCAL

However, Australian national carrier Qantas is concentrating on its local target audience. Its latest ad campaign is an attempt to rebuild its market share, which has been slipping since the 1994 launch of Australian rival, Ansett.

The Qantas campaign, devised by M&C Saatchi Hong Kong, uses TV and print advertising, sponsorship and public relations. Ads center around a well-known local kung-fu star. "When it comes to flying to Australia," the commercial says, "he leaves it to another flying expert-Qantas."

So far, Qantas TV commercials have aired in Hong Kong and Taiwan.

But Asian airlines need to be wary of runaway success in the short term, warns Travel Business Analyst's research director, Murray Bailey. Until new aircraft are delivered (around the turn of the century), they won't have the seat capacity to fill greatly increased demand, he explained.M This grass-roots push will be backed by advertising, according to Tajudin Ramli, the airline's chairman. Non-Asian airlines also are going for a share of the region's travel pie.

For example, British Airways is repositioning as an airline that is "caring." Asian icons, such as the Peking Opera, appear in a worldwide campaign by M&C Saatchi, which broke earlier this year. Global ads are tailored for specific Asian audiences. Research efforts also are intensifying. Angela Pih, M&C Saatchi Hong Kong account director, says BA is conducting increasingly detailed research into the hopes and ambitions of different age groups in Asia. "We want to make sure we understand [our customers]," she said. "We found that our target audience wanted to see themselves portrayed."

In BA's latest Club World (business class) campaign, the Hong Kong print ad shows a mature Hong Kong executive's head and shoulders atop a baby's body being cradled in his mother's arms. For Korea, a picture of a much younger Korean executive is substituted. Ms. Pih explains that Korean executives who would consider flying on a foreign carrier tend to be much younger.

Asian leisure travelers are another target for BA. The relative youth of Asian travelers is central to its marketing strategy.

"Independent frequent travelers who plan their own holidays rather than join group tours tend to be in their late 20s and early 30s," Ms. Pih said. "They are destination driven."

However, Australian national carrier Qantas is concentrating on its local target audience. Its latest ad campaign is an attempt to rebuild its market share, which has been slipping since the 1994 launch of Australian rival, Ansett.

The Qantas campaign, devised by M&C Saatchi Hong Kong, uses TV and print advertising, sponsorship and public relations. Ads center around a well-known local Kung-fu star. "When it comes to flying to Australia," the commercial says, "he leaves it to another flying expert-Qantas."

So far, Qantas TV commercials have aired in Hong Kong and Taiwan. Local uplift increased 54% during the campaign.

But Asian airlines need to be wary of runaway success in the short term, warns Travel Business Analyst's research director, Murray Bailey. Until new aircraft are delivered (around the turn of the century), they won't have the seat capacity to fill greatly increased demand, he explained.

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