TLDR:
- It’s all about identifying a specific niche within a market. As Alex Hormozi says, “the riches are in the niches.” Cater to them in a matter that uniquely serves them only and solves their biggest problems
How airlines have carved their own billion-dollar niches within a singular market
Imagine if three of America’s major commercial airlines were bread companies: Southwest, Delta, and Spirit.
What if instead of competing for a big piece of the pie in the airline industry, they were doing so in the bread industry instead?
In theory, all three airlines provide the same product: flying customers from point A to point B.
So as bread companies, how would they successfully target their ideal customer?
Southwest would probably run advertising campaigns emphasizing the “bang for your buck” value, how you can buy bulk very cheaply, and the convenience of their low price tag.
Delta’s campaigns would be all about freshness and high quality by sourcing their bread from an upscale French bakery to ensure customers their bread is the best in the market. They may also run campaigns specifically targeting picky eaters, with whole wheat and gluten-free bread for example.
And just like Southwest, Spirit would advertise how unbelievably cheap their bread is, targeting customers who are tight on a budget and want to save money wherever they can.
So what does all actually look like as airlines? How does the customer experience and messaging differ for each airline?
SOUTHWEST AIRLINES
Target Audience
- Leisure travelers
- 18-24 age
Price range
- According to Statista, in 2021, the average passenger was $141.92.
- Also offers consumers the option to look for the lowest fares for specific itineraries through its Low Fare Calendar, which lets customers see which months and days their itinerary is the cheapest.
Amenities
- Offers their passengers a no-frills air service, 2 free checked bags, and snacks on the plane.
Customer Loyalty
- Points system known as Rapid Rewards
- Perks include unlimited reward seats and no blackout dates
- Points never expire
- Offer a credit card that gives you points every time you make a purchase with it
Messaging
- Aim to “democratize the sky through friendly, reliable, and low cost air-travel.”
- Further emphasized in their purpose and vision, frequently using words and phrases synonymous with low-cost traveling
- “Big sale, itty bitty fares.”
Lesson
- When targeting a specific subset of customers, have an emphasis on words that will lure them to you when advertising your product
In spite of being a low-cost airline, Southwest’s market cap as of today reads at $20.51 billion USD. They also had the second largest share of the market 17.4% at the end of 2021 according to Statista, and approximately flew 1,095,000 flights in 2022.
Leisure travelers finding their seat in a Southwest Airlines aircraft
DELTA AIRLINES
Target Audience
- Business travelers, professionals, wealthy consumers, consumers who want every traditional airline service packaged as one, and families
- Offer 300 destinations in more than 50 countries and are a part of the SkyTeam alliance to fly to 1000 cities in 175 countries.
Price Range
- Typically starts at around $350 per passenger (round trip).
Amenities
- Snacks on the plane as well as dinner and breakfast
- Ă la carte service (depending on the duration of the flight)
- An infotainment system, and charging ports.
Customer Loyalty
- SkyMiles rewards program
- Points expire at the end of every year
- Passengers are offered privileges based on their medallion status
- All members of SkyMiles are offered priority boarding
- Co-branded credit card
- Earn points with each purchase
- Card also offers perks such as early boarding and discounted or free memberships to Sky Club lounges
- Medallion members can also be offered complimentary upgrades depending on their status.
Messaging
- Their slogan is “Connect the world” and “Plan your next adventure”
- While boarding and after arrival, Delta plays a promotion of all the destinations they fly to and use phrases such as “Visit [City Name] and “Plan a trip to [City Name]”
Lesson
- When targeting a wider audience, use phrases that will get them interested in your product and what you are offering, but be brief at the same time.
- Be convincing enough in the marketing of why what you offer is the best said target consumer’s price range can buy and cannot be found anywhere else.
Even though Delta targets a wealthier demographic, its market share last year was only 16.3%. But their market cap is fairly higher than Southwest’s at $27.30 billion. Yearly, they fly approximately 1,460,000 flights.
SPIRIT AIRLINES
Target Audience
- Looking for a deal
- Frequent flyers to a specific destination but don’t want to spend a lot of money every time
Price Range
- According to Statista, the average passenger fare for Spirit Airlines was $98 in 2020
Amenities
- Offers amenities but not included in the ticket price (have to pay for it individually)
- Pay for each bag to check-in
- Snacks and refreshments are paid
- Printing a boarding pass
Messaging
- Very frequently use the word “soar”
- “We soar together”
- “We SOAR by serving each other and our Guests, one journey at a time.”
- “Less money. More go.”
Customer Loyalty
- Free Spirit rewards program
- Earn points based on how much money is spent on fares and À La Smarte
Lesson
- Promotion is perspective
- It is about seeing where the value really lies for the consumer and what makes it appealing to them
Though as you can probably expect, Spirit had the smallest market share compared to Southwest and Delta, only 4.9% specifically.
Key Lessons
The airline market is very saturated, so the only way to stand out is by targeting a specific niche and creating experiences that the niche values.
Most mature markets are the same way. If you’re entering a crowded market, you can’t target everyone. Instead, look for a subset of customers that are frustrated with an aspect of the existing experience and create an experience that solves that frustration.