Consumers in Asia are wielding more power than ever before, triggering the biggest change in the regional travel market over the last decade.
Or so says Kathleen Tan, group head of commercial for leading low-cost airline in the region, AirAsia.
“There’s the empowerment to fly and there’s the empowerment to buy. Low cost airlines and the internet have changed buying behaviour in Asia. There’s more virtual planning – people can do a lot more search – and they book instantly.
For example, Tan says: “When we put Yangon on sale recently (the airline launched Kuala Lumpur-Yangon flights in July), we sold 50,000 seats.”
At the same time, there’s a generational shift happening with travellers in Asia.
“As they are empowered to fly and buy, they have also become more empowered as travellers and the smarter travellers now do not need tour guides or buy package tours – they search for information on the web, and they share information with each other on social networks.
“People are more experimental now and are seeking new kinds of travel experiences.”
This is why she believes vendors and operators have to change not only the way they market but also the way they serve these new travellers.
“I urge the industry not to always look to the West, the spending power is in Asia, and we have to change the way we engage with the new Asian customer.”
“Younger people are more savvy now, do you still sell them the same packages? Do you still take them to gems stores and get commissions? People know where they want to eat. They can find the best places to get a tattoo in Bali,” says Tan.
“For me, the romance in travel is in the exchange that’s happening between students and young people, something that’s been facilitated by low cost airlines. Mainland Chinese are now coming to Malaysia to study; before it was only Singapore, but the less wealthy Chinese are opting for Malaysia.
“We have Malaysians going abroad to study and search for jobs. There’s labour mobility, medical mobility. In Malaysia, nurses are hard to come by and so we have lots of nurses from south India working in the country. And Malaysians are going to India for beach surfing at half the price they’d pay in Bali.
“In Bandung, Indonesia, there are 20 universities – imagine the opportunities for youth travel from that market.”
As a marketer, Tan is proudest of the airline’s annual “one million free seats” promotion. Having run it for the last five to six years though, the customer is getting smarter at it.
“It’s become a game to some now. They know it’s hard to get, and so if they get it, they feel good and tell their friends about it.
“They have become marketers for us. There’s a Chinese customer who managed to book 30 free tickets and, apparently, he studied our route map and our website for a month and when the day came, he did it with such speed, got 30 and told all his friends about it.”
Sometimes, promotions can bomb. “Every route has different characteristics – Yangon is different from Taipei for instance. India is what I call a “marathon” market. The purchasing process is much longer, they discuss a lot before they buy. They also like to travel in groups, so they talk a lot among themselves first.
“With Taipei, it explodes but in India, it’s a slow burn – you can’t take your budget and spend it in one go.”
The travel agency channel is not something that excites Tan. “I refuse to pay commissions to travel agents in Singapore; I don’t want to get into legacy business. To service agents, you also need manpower.
“When we first entered China, we depended on travel agents but now our brand is more established, and people know how to book us online. We are also seeing more FIT travel from China.
“India is challenging – people are still reliant on travel agents – but I see a tipping point taking place this year as our brand gets more established.”
Consumers however need a physical presence from time to time to reassure them that the airline is actually run by people and not computers.
“We held an AirAsia travel fair in Jakarta recently and we had people coming up to us who thought we were run by computers, so you need to be present physically for people to feel your brand.
“We have a long way to go still in some markets,” says Tan.
Community marketing is a personal passion of Tan. She watches with interest how Zouk Club of Singapore has managed to stay relevant to its customers despite it being probably the oldest club in the city.
“They are constantly revamping to stay relevant and has held on to their customers," she says.
Another company she watches is Apple – “they way it upsells and cross-sells”. She said, “They think out of the box and they keep everything within the community.”
One market that has surprised her is the luxury market and how people are still paying a lot of money for luxury products.
“LV has remained so relevant that a mother and her teenage daughter can carry the same brand. It’s an old brand but has engaged hot new designers like Marc Jacobs, brought out limited editions and clearly beaten the pirates.
“There’s a new generation of kids too who don’t buy pirated stuff and get a kick out of it.”
AirAsia recently released its second quarter results, ending June 30 2010, which showed a profit after tax of RM199 million.
Revenue rose 26% year-on-year from RM748 million to RM941 million. Passenger growth was 11%, rising to 3.9 million passengers. Load factor rose to 77% in 2Q2010 from 75% in 2Q2009.