While the sector loses 36,000 million euros, 37% less than the previous year, in brand value in the world, and the industry sees short-term recovery in leisure travel, Two Spanish airlines represented in the list of the 50 most valuable brands in the world, Iberia and Vueling, maintain and improve their positions in the Airlines 50 2021 ranking, prepared by the Brand Finance consultancy. This study analyzes the brand value, understood as the net economic benefit that the owner of a firm would achieve by granting the license in the open market, and the strength of the brand such as the effectiveness of its performance on intangible measures relative to its competitors.
Three American companies lead the ranking, despite the fact that they have lost between 38 and 40% their brand value: Delta (4.9 billion euros), American Airlines (4.5 billion) and United Airlines (4.3 billion), while the spanish Iberia and Vueling, Belonging to the British group IAG, they maintain their positions in the world sector brand value report. Iberia remains in 34th place, despite losing 25% of its value to the pandemic, and Vueling climbs two places to 48th on the list.
The aforementioned study highlights Iberia’s evolution since 2014, a year in which the group’s economic results were spectacular, with a business value of 5,080 million, as well as in value and brand strength (77 out of 100). Since then, the Spanish airline has remained constant between 3,300 and 2,600 million in business value. Brand strength and value also suffered a decline from 2015 with values ranging from 73 to 69 points in terms of brand strength. The company is immersed in a transformation stage to adapt the business to the new reality. During the first quarter of the year alone, the IAG airline group announced losses of 1,068 million euros, compared to 1,860 million in the same period last year.
For its part, Vueling, which was born in 2004 in Barcelona to respond to a new traveler profile that demanded to fly at competitive prices, transported 28 million passengers last year, of which 16.5 million left Barcelona. . In this latest study, the company chaired since September last year by Italian Marco Sansavini, former commercial director of Iberia, climb three places in the ranking of the most valuable, from 50 to 47. However, it falls by 31.9% in brand value and 5.6 points in strength. The airline with the most connections between Barcelona-El Prat and the rest of Europe, tries to enhance its profile as a passenger feeder for long-distance operations, which is why it has launched Vueling Global, a platform on which it will offer flights in connection with the offer of Level.
According to the managing director of Brand Finance in Spain, Teresa de Lemus, “this crisis in the tourism sector is a catalyst for the strongest brands since those are the ones that will recover the best and will be able to take the opportunity to expand through mergers.”
In terms of brand strength, Aeroflot is the strongest brand, based on three pillars: Revenues and activities that support future brand strength, brand equity, and the result or impact, business outcome measures. related to the brand, such as market share. With a score of 89.5 out of 100 and a AAA rating, the Russian company remains the strongest airline brand in the world despite having lost 41.9% of its brand value. Aeroflot recently undertook a change in strategy to become a more premium class travel option, while also having to cut capital expenditures and suspend deliveries of aircraft, such as the next-generation Boeing and Airbus aircraft. , gradually replacing their older fleet.
For their part, Jet Star (+74.6 points), Garulda Indonesia (11.8 points) and Norwegian Air (+4.8 points) are the brands that increased the most in this section. In addition to the aforementioned, four other brands rose in strength: Etihad Airways (+4.1 points), Air Newzealand (+2.2 points), Qatar Airways (+1.9 points) and Xiamen Airlines (+1.3 points).
Within this category, Iberia, in position six of the 10 strongest in the world, is also among those that lose the least strength with -4.2 points compared to 2020 with a score of 83.1 out of 100 (AA-). Vueling has not been so lucky and loses -5.6 has a strength of 75.5 out of 100 (AA). “Iberia is the sixth strongest airline brand in the world, given the strong reputation of the brand, also an ambassador of the Spain brand, as well as the constant effort in safety, innovation and constant improvement, which gives it a solid position in the global airline market in the face of imminent easing of international travel restrictions, “explains De Lemus.
Not the Twin Towers
The report emphasizes the devastating effects of the pandemic on the air transport industry. Neither the fall of the Twin Towers in New York nor the financial crisis of 2008 can be compared to what we are experiencing now. And they recall the forecast of economic experts who assure that world GDP will be reduced by 1.5 trillion euros, in which this sector has a global weight of 10%.
The crisis also extends to manufacturers, Airbus and Boeing also suffer the consequences of airlines having reduced their fleets. In the case of Boeing, its business value, which had been growing since 2010, plummets in 2021 from € 186 billion in 2020 to € 103 billion this year. The strength of the brand has also declined, consequently, the brand value falls from 27.6 billion in 2019 to 11.6 billion in 2021. For its part, Airbus experiences a similar trend: from 101.2 billion in value business in 2020 are reduced to 48.3 billion in 2021. Brand value falls from 12.9 billion in 2020 to 7.7 billion in 2021.
With seven brands in the ranking, the United States is the nation that contributes the highest brand share but the figure is down 41% compared to 2020 (19,500 million euros). They are followed by China, also with seven brands and 40% less value added (9,000 million) and the United Arab Emirates, which, with only two brands, Emirates and Etihad Airways, add 4,500 million, 34% less. In the seventeenth position is Spain, in value contribution level, 875 million between Iberia and Vueling, and reduces its contribution by 27% compared to last year.
The International Air Transport Association (IATA) predicted that the industry will not fully recover to pre-pandemic levels until 2023 or 2024. According to Brand Finance analysis, low-cost airlines such as Volotea, which recovered liquidity thanks to an ICO loan that has exceeded 35 million travelers, or Level in Spain, will recover faster than full-service ones. However, both will depend on the advancement of vaccination worldwide, as well as the effectiveness of controlling the new variants or emerging strains. Business travel is expected to stagnate, while leisure travel is likely to be the main driver of the recovery across the industry.
Three new entries
There are three new entrants to this year’s ranking: Saudia (brand value of 431,000 million) in 39th place; Jetstar ($ 307 billion brand value) at 49; and Avianca (303,000 million), which closes the classification.
Saudia has weathered the storm by redirecting its resources to its strong domestic market, as Saudi Arabia recently announced its goal of becoming a tourism and logistics hub with more than 100 million tourists by 2030, increasing the number of destinations to 250. and doubling the air cargo capacity. In this sense, Saudia plans to significantly increase the size of its fleet to capture this growth in the market. This expected internal growth and the ambitious vision for 2030 make the brand one of the most important, as it builds its strength and international brand value.
The most valuable airports
Despite the complicated situation that airports are experiencing, like the airlines, Madrid-Barajas Airport climbs seven places in the international ranking, placing it among the 20 most valuable in the world (18th place). The pandemic causes its brand value to decrease by 15.6%, but it rises in the ranking thanks to the increase of 1.9 points in terms of brand strength that is already 65.3 out of 100.
Spain adds a new entry in the study: Barcelona-El Prat Airport, which is ranked 24th in the sector ranking with a brand strength score of 57.5 out of 100. Paris airport, which entered the 2020 ranking again ranks first, leading the 25 most valuable with a brand value of € 506 million. None of them increase their brand equity this year. The biggest drop is experienced by the Hong Kong International Airport, which loses 63.1% of its value. The Zürich Airport and the Madrid-Barajas Airport are the ones that obtain the best results and manage to better resist the effects of the pandemic, losing 18.1% and 20.4% of their value, respectively.
Unlike airlines that can cut costs by leaving planes on the ground, airports still have the same fixed costs and have not received state aid. According to the Airports Council International (ACI, in its acronym in English), its revenues will decrease by 81,000 million euros.
Aena’s recovery expectations are encouraging, among other factors, thanks to the fact that it will make the good results of the airlines profitable low cost and less dependence on IAG. The airport manager will recover the volume of passengers prior to the pandemic in the second quarter of 2022, before its main European competitors, such as the German Fraport or the French Aéroports de Paris, which will not do so before 2026 and 2024, respectively.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.