Joon – Janet and John do branding

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Joon is an interesting if somewhat belated attempt by Air France to enter the budget space – reported here

This venture was first announced back in July when Air France described it as “complementary” to their main services. They’ve already tried to re-invent themselves through Hop!, their regional-to-shorthaul airline brand. However, with loyalty miles, a business class cabin and prices in excess of BA’s standard fare, it’s not exactly ‘budget’! Curiously, Joon are also running the Flying Blue program with miles and lounge access (all of which bears a cost) so once again it’s not exactly ‘budget’.

As some of you may know, I’m (Ed2) a rather seasoned traveller (“it’s not the age, it’s the mileage”), and am always on the look-out for new ideas, new routes, new carriers.

Unfortunately, I fear that Joon is already setting itself out for failure, and here’s why.

1) Even if they’re right about this being attractive to millennials, they should also have realised that millennials are notoriously promiscuous in their purchasing patterns for all but the funkiest of brands (Apple, Google, Facebook). They will make their selections based on location and price, and not the brand;

2) As if that’s not enough, have a quick look at the websites at www.joon.fr or www.joon.com. You’ll see that Air France hasn’t even registered the URL for Joon separately, keeping it as part of Air France. They perhaps haven’t read the book “Janet & John do Branding”, but I’ll send them a copy today just in case;

3) Utilisation and seat-yield rates are the key measures of survival for any airline, and most especially for the budget end. They will need every bum-on-seat they can find and being so selective about their marketing will not help them here;

4) Size matters for profitability in the budget space, allowing for a broader allocation of marketing investment plus allowing for some flattening out of the impact of popular and less popular routes. It’s just not viable for 28 planes to bear the load;

5) Probably the most important factor, and one which has so far dogged virtually every other budget airline spawned out of a so-called flag carrier, is that of cost base. The most enduring and financially successful budget airlines in Europe are Ryanair, Easyjet and Norwegian. These are the brands with which Joon will be competing. Each of these three have been able to carve out their own cost models without any deference to “sister” airlines. That Joon’s pilots get the same deal as their Air France counterparts, plus their choice to maintain loyalty programs, means that they are already at a competitive disadvantage to the other three. When faced with a price war on certain routes (at which Ryanair are particularly agile), they will simply not be able to compete on price. Their pricing currently sits in the same bracket as Hop! and BA so that’s not going to help them grab market share.

6) In budget airline land, there are really only 4 key areas for competitive differentiation – price, destination uniqueness, service or just amazing branding & marketing (for this last one, think Virgin everything). They’ve started out with zero chance of winning on price (per item 4 above). On destination, they appear to have chosen several already-well-served cities, so there’s no edge there. They do have some interesting points on service levels with every seat getting a USB power point. That the cabin crew are “attractively dressed in smart casual attire” is prominently pushed as a benefit to passengers, but I’m struggling with that one. That gimmick didn’t save bmiBaby either. On the marketing, well they don’t appear to have thought about the website so a win there looks unlikely.

Need I go on? It’s a shame, because new choice is always a good thing. There will be a short-burst gain for consumers with deals, counter-deals and bargains galore but ultimately, I think they can only fail.

The only possibility that I can see for them to succeed would be if their positioning and marketing increases the size of the market; if they can reach an entirely new client base which until their launch had not chosen to fly. Perhaps there are millions of millennials out there who, thus far, had chosen not to fly due to a lack of USB ports or cabin crew dressed in white sneakers?

I somehow doubt it. I’d give them about 24 months, or about say €3 billion in write-offs…?