Written by Enrique Perrella and James Field
LONDON — Brand Finance, a valuation and strategy consultancy company, has released its 50 most valuable airline brands of the world report, coming up with some startling results.
American Airlines, for the second consecutive year, has come on top of the list with a whopping $9.1 billion brand value. Delta Air Lines came in second, with an $8.7 billion value, followed by United Airlines.
But even though the top three US carriers are leading the list, not all is good news for the US airline industry.
American Airlines retains its number-one position but has faced a 7% decrease in value in the last 12 months.
Likewise, Delta also shows a 6% decrease, whereas United only dropped a couple points.
Brand Finance notes that the cause of the valuation drop in the US carriers is tied to customer perception.
“In the airline market, customers are making decisions about brands on a very narrow range of factors: price, routing, and schedules,” said David Haigh, CEO of Brand Finance. “Despite big viral news stories which gained media attention globally affecting several brands, in the airline business, it is reliability on delivering core services that customers find the key to taking purchasing decisions.”
In American Airlines’ case, the decrease is directly tied to the level of unhappiness that is being portrayed over social media by its customers, similar to what happened with the 2017 United Airlines scandal when Dr. Dao was dragged off a flight and numerous passengers posted the unhappy event via social media feeds and thus rapidly becoming viral.
Moreover, the rapidity of social media posts provides a response rate that, decades ago, didn’t exist. Today, passengers feel entitled to providing immediate feedback when things don’t go as expected, directly affecting a brand’s value.
Besides social media unhappiness, Brand Finance claims that larger macroeconomic challenges in a post-consolidation phase have also contributed to the valuation losses.
Southwest Airlines also produced a 12% decrease in value.
US Carriers Within The Top 50
In the United States, the good news is that its top three carriers are leading the world’s list in value, with American, Delta, and United reigning on top of the world.
In the fifth spot, worldwide, Southwest marks a $5.2 billion worth. Up next, is Alaska Airlines in the 20th position, followed by JetBlue in the 23rd and Spirit Airlines in the 41st.
Heads Up, China is Coming!
According to the report, Chinese carriers are being valued far greater than their American counterparts. Chinese Airline growth has increased by up to 21%.
China Southern’s brand value has risen by 10% in 2018 to $4.1 billion and remains the leader in the Chinese market, ahead of China Eastern, whose value increased by 21% to $3.8 billion. Air China comes up third, with a 19% increase to $3.4 billion.
“Chinese brands are the big winners in this area as they have been able to grow their brands by giving customers greater confidence in their dependability and safety as they grow alongside the Chinese economy,” Haigh said.
Overall, China has nine carriers figuring in the Top 50 list, with Xiamen Airlines and Shanghai Airlines joining the list for the first time.
Another carrier to watch out for is Hainan Airlines. This Chinese carrier has also expanded significantly across Asia and the Globe, grabbing new planes and expanding their networks around the globe. Hainan moved up nine places from 30 to 21 after a remarkable 79% increase in brand value from $900 million to over $1.6 billion.
In the global airline scene, Emirates retains the fourth spot. Despite the macroeconomic challenges the Emirati carrier faced, as well as their broader geopolitical issues, its ranking remains unchanged. Emirates’ overall drop was of 12% to $5.3 billion.
Qatar Airways suffered similarly due to the political blockage that knocked its operations last year, resulting in thousands of unhappy passengers who had hoped for a reliable connecting service through the airline’s Doha hub, resulting in an 11% decrease to $1.9 billion.
Etihad Airways, which stands in the 16th spot, also recorded an 11% decrease to $1.4 billion.
In Europe, British Airways’ brand also saw a significant decrease of 6%, falling to 8th place, right behind the Chinese competitors.
READ MORE: How Is Qatar Coping With the Blockade?
Norwegian managed to remain stable, keeping the same 31st spot it gained in 2017, despite the gigantic growth and route openings the airline has had.
And in a surprising result, Singapore Airlines has dropped six positions, from 37th to 31st, after losing almost $400 million worth of value.
The World’s Strongest: Aeroflot
Even though American Airlines reigns as the “World’s Most Valuable” airline brand, Aeroflot leads as the “World’s Strongest.”
Brand Finance claims that Aeroflot’s result is “driven by consistently strong brand equity, built up through investments in its brand and marketing promotion in the Russian and key international markets.”
Even though the airline is not featured within the World’s Top 10 Most Valuable list, its overall brand value went up 13% to $1.4 billion and keeps a sound AAA brand rating.
READ MORE: #FlybackFriday — Aeroflot Comfort Class
Fast Growing Brands
Lufthansa also made it into the top-10 chart. The airline’s brand value has grown by an astounding 29% to $2.9 billion and has become one of the fastest growing brands in the world.
Brand Finance claims that Lufthansa’s sudden boom is closely tied to the collapse of Air Berlin, which, in essence, has given Lufthansa more access to holiday markets as well as all of the other destinations within the Air Berlin portfolio. Also, the airline recently updated its corporate image and aircraft liveries through a well-thought campaign, inherently raising its brand awareness throughout the world.
READ MORE: Analysis: Air Berlin Was Always a Lost Cause
Qantas has also been credited for its recent development, advancing their lead into the point-to-point market. Qantas’ value has grown by 1% to $2 billion due to the greater fuel efficiency in their fleet and smaller load capacities, allowing more direct long-haul flights.
This has obviously been exemplified by the recent Perth-London service, which gained a lot of traction earlier this year.
READ MORE: QF9: A New Achievement in Aviation & Qantas Completes First Non-Stop Flight to London from Australia
On the surface, it might seem that the geopolitical and economic conditions present in the Middle East could be enabling the American carriers to remain at the top. However, with the rapid growth of Chinese carriers emerging, the US3 can expect further challenges from their competitors both in the short and long-term.
Carriers to Watch Out For
Looking beyond the top 10, there are some carriers that could easily penetrate into that leaderboard.
At number 12 is Japan Airlines (JAL), which experienced significant growth in their value, increasing 21% to just over $2.4 billion.
This moved them two spaces in the list—just below its main competitor, All Nippon Airways (ANA), which sits at the 11th spot recording a 5% decrease in valuation. Watch out for JAL.
In Europe, the Air France-KLM group shows its two airlines sitting in the 18th and 33rd position, respectively. The French flag carrier jumped up five positions, gaining lost territory following a 16% increase in value from $1.5 billion to $1.8 billion.
Regarding the world’s most famous Low-Cost Carriers, Southwest leads in the 5th spot; followed by Ryanair, which jumped up three places to the 17th position; and easyJet, sitting in the 19th spot.
Looking at the lower end of the table, other Low-Cost Carriers like WestJet and WizzAir sit in the 33rd and 47th spot, respectively.
The Full List
Collectively, the carriers depicted in the list have shown that the top 10 is a competitive minefield and can change very quickly on a volatile scale year-after-year.
From this study, it is evident that carriers in the West and in the Middle East are struggling to regain or increase any perspective of brand value, with the exception of carriers such as Lufthansa. The German carrier has proven that its strategy seems to be working across Europe and the globe. With a significant increase of nearly 30% in the carrier’s brand value, other airlines will be looking closely at their business model and will see how they can implement its processes into their current system.
Another important takeaway is that the Chinese presence in this list is harming airlines in South America, where only LATAM Airlines figures in the 26th spot.
For now, the study may also show a vision going into the long-term. If geopolitical, economic and social elements cannot be changed, the top carriers could potentially see their value go down even further. It is going to be interesting to see how airlines will respond this year and what precautions and solutions they will take to either reduce the decrease or to produce an increase in their brand value.