Low cost carriers morph to lure business travellers

SINGAPORE — Low cost carriers (LCCs), traditionally focused on mass market travellers, are transforming their business models with aggressive strategies to lure corporate travellers, hitting the much larger full-service airlines where it hurts most.

Businesses have slashed travel budgets amid the global economic slowdown in recent years. LCCs are cashing in on this belt-tightening by re-designing offerings from flight schedules to fares in order to grab a larger pie of the corporate market even while legacy carriers struggle to fill their business class seats.

“The business travel segment is growing at twice the speed of overall market demand in key markets where we have introduced dedicated products, namely Australia, New Zealand, Singapore and more recently, Japan... We have put in place dedicated teams to further develop our offerings to the business traveller. We want to be the stand-out LCC in the business space,” said Mr Leslie Ng, regional general manager - Southeast Asia at Jetstar.

The airline’s peak-hour flights from Singapore to Kuala Lumpur, Jakarta, Hong Kong, Manila and Yangon, are predominantly filled with business travellers, he added. Fuelling this demand is the growth in entrepreneurial businesses as well as small and medium enterprises seeking to penetrate regional markets, many of which are connected by the LCCs.

“The LCCs, having undergone dramatic changes, are attracting corporates on tighter budgets. It also appeals to business travellers who do not wish to transit in main cities, especially in the Southeast Asian region, where certain routes are plied only by LCCs… Amid the slowdown, we see more executives travelling in order to generate new leads, seek new business opportunities and maintain and secure current relationships with clients,” said Ms Alicia Seah, ‎Director of Marketing & Communications at Dynasty Travel.

Among the LCC offerings to lure business travellers are the ease of managing bookings on-the-go, speed at check-in and boarding, as well as the flexibility to change flights scheduled for same-day departure without incurring a fare difference or rescheduling fee.

For entrepreneur Joseph Lew of Red Dot Robotics, who regularly takes day trips to Hong Kong, flying a full-service carrier isn’t the top priority. “What is important is the schedule, that I get there on time and that the seat is comfortable. We need greater flexibility from airlines in their travel itineraries. When overseas, the local traffic conditions can dictate the time of my meetings. If the airlines can allow me to change my travel plans within the day without incurring additional charges, to leave earlier or later while on the move, it will be ideal,” he said.

There are also destinations, such as Macau and Hainan, where budget carriers offer the only option for a direct flight from Singapore. “In such situations, the majority of travellers would also opt for budget carriers over the indirect full service carrier,” said a spokesperson at travel agency Chan Brothers.

Jetstar has launched a dedicated Business Hub on its website for companies to register for free and get access to unique features designed for those travelling for business. These include monthly travel expenditure reporting, the ability to hold seats prior to payment and the flexibility to make and change bookings via the phone, web or mobile app.

Passengers buying the carrier’s FlexiBiz Bundle can change flights even on the day of departure – a feature that comes in handy when meetings run late or finish early. It also provides for upfront seating and an extra carry-on bag, and there are no change fees for dates or names.

Rival Scoot boasts a suite of products and services akin to those offered on full-service carriers. “We are actively growing the corporate travel segment through commercial agreements with travel management companies, corporate travel agents, and other sales platforms to capture a wider market demand for value airfares… In particular, we have observed a growth in the ScootBiz take-up rate for our flights between Singapore and destinations in North Asia,” said a Scoot spokesperson.

Individual business travellers, the Scoot spokesperson said, can access additional options for one flight or name change up to 24 hours before departure, besides priority check-in and boarding, as well as the ability to earn KrisFlyer miles. Scoot also offers business passengers three-hour access to the SATS Premier Lounge that provides complimentary wi-fi access, shower facilities, workstations and massage chairs among other facilities.