Introduction
Velvet Sky, a low-cost airline, was founded in March 2011. The company emphasized cost-saving measures throughout its operations and was touted as the first Broad-based black economic empowerment compliant airline located in Durban. Despite initial success, Velvet Sky encountered financial difficulties, leading to the grounding of its flights. This essay critically examines the implications of these financial problems and flight suspension on the Velvet Sky brand.
Discussion
Velvet Sky was a true underdog story that resonated with many working class South Africans. The airline championed the cause of South Africans by offering lower-cost flights and taking on the industry heavyweights. In just a few months, Velvet Sky made a significant impact in the domestic discount airline market and experienced growth thanks to the support of passengers who benefited from their lower airfares.+
Velvet Sky demonstrated strong brand equity by appearing on Google’s Top AS searches for 2011. Nonetheless, its popularity declined rapidly due to financial difficulties and the subsequent cancellation of flights. The cancellation of flights left numerous customers stranded, creating a negative perception of the Velvet Sky brand. In light of this disappointment, customers would find it challenging to trust a brand that has let them down in the past.
The financial troubles experienced by Velvet Sky would have a detrimental effect on its brand. In the aviation sector, safety is of utmost importance, and passengers need assurance that their purchased tickets will ensure a secure journey. If an airline is financially unstable, the public may perceive it as compromising safety measures to cut expenses, thus raising concerns about its reliability. Velvet Sky was established in March 2011 and had less than a year to establish its brand reputation before encountering financial difficulties.
The limited time may not have allowed enough opportunity for customers to connect with and understand the brand. Brand equity refers to the extra value given to products and services. Customer-based brand equity is the impact that brand knowledge has on consumer response to the brand’s marketing.
Generally, a company with a well-established brand equity and a strong corporate image is more likely to withstand a crisis. Despite initially having positive brand equity, I believe that Velvet Sky did not have enough time to establish its corporate image before the crisis, which led to a negative public perception due to its bad publicity.
Conclusion
The financial challenges and suspension of flights have adversely affected the reputation of Velvet Sky, resulting in customers being cautious about choosing the airline for their travel needs. Consequently, this further worsens the company’s financial problems. If there is no way to fix the damage done to its brand image, it could ultimately result in the downfall of Velvet Sky.
Social media has had a revolutionary impact on companies’ advertising and brand development, giving consumers more influence. Nowadays, social media can determine whether a company succeeds or fails. To explore this issue further, we will analyze how social media worsened the Velvet Sky crisis from a marketing standpoint. Users use social media as a way to express themselves, and when their flights were delayed or canceled, many customers expressed their dissatisfaction on various social media platforms. As a result, there was a rapid increase in posts across multiple social media websites within minutes. Interestingly, 86% of these online mentions about Velvet Sky were negative.
The comments received a wide reach of over two million people, exacerbating the crisis and posing difficulties for Velvet Sky in containment efforts. Velvet Sky’s mishandling of the crisis and response to online threats have further undermined their brand. The company showed slow responsiveness to inline comments and adopted a reactive rather than proactive approach, failing to reach out to customers first. This lack of transparency created a perception that Velvet Sky was evading the public and being dishonest.
Although social media exacerbated the crisis, I believe that Velvet Sky could have utilized it to their advantage by implementing proactive and transparent actions to satisfy customers. Social media possesses the ability to either amplify or damage a company’s reputation. In the case of Velvet Sky, its extensive presence on social media undeniably had a detrimental impact on the brand. Nonetheless, this outcome was also influenced by how Velvet Sky handled the situation.
Kettle and Keller (2012:338) suggest that companies should have promptly addressed customer concerns and utilized social media effectively to prevent unfavorable media coverage or negative word-of-mouth. Regrettably, the company in question opted not to respond at all, which resulted in the adverse effects being amplified through the power of social media.
According to a 2012 study by B. Campbell and D. Vicar-Ellis, the SAC’s aviation industry in South Africa witnessed a remarkable growth rate of around 14% per year in the three years leading up to 2007. Additionally, there was a significant increase of 70% from 2003 to 2007 in air travel.
The proliferation of low-cost airlines following industry deregulation in the early offs led to the impact on its competitors and Velvet Sky’s entry into the market with the lowest flight prices. This prompts us to examine how other low-cost airlines (competitors) are likely to react to the grounding of Velvet Sky. Velvet Sky gained market share swiftly and posed a threat to its competitors, namely Kulak and Mango, through its remarkably low prices, akin to the cost of a bus ticket.
Mango and Kulak are not considered authentic low-cost airlines because they are owned by South African Airways and British Airways respectively, and they are simply cheaper options. This ownership provides Mango and Kulak with a financial advantage in the industry. However, the presence of Velvet Sky in the low-cost market resulted in decreased air ticket prices as competitors attempted to keep up. Now that Velvet Sky is no longer in operation, its competitors are quickly striving to capture the market share it left behind. This situation could potentially lead to Mango and Kulak raising flight costs since there is no longer a low-cost airline pushing prices down.
This report aims to offer suggestions for revitalizing the Velvet Sky brand. To restore brand equity, we must either recover lost sources of brand equity or establish new ones. The Velvet Sky brand has suffered from the adverse effects of the financial crisis, leading to its damage.
Recommendations
Velvet Sky must realign its positioning and become an airline catering to the working class, while also appealing to the middle and lower class. To achieve this, Velvet Sky should enhance the breadth and depth of its brand awareness among customers.
To enhance customer service, establish an online platform where customers can express their concerns, provide suggestions, or offer feedback on the service they have received. Additionally, provide training to staff members in conflict management to effectively handle difficult customers. Foster open and ongoing communication with customers through news updates, website notifications, and interaction with staff. Maintain transparency with customers by providing updates on current situations and initiatives being carried out. If customers were inconvenienced, promptly refund and compensate them for their troubles. Finally, rectify any negative perception by enlisting the assistance of public relations experts.
The suggested actions for Velvet Sky include implementing strategies for managing brand crises, revitalizing the brand, and reinforcing the brand. It is recommended to create a loyalty program to attract and retain customers. The online booking process should be simplified for customers, making it easy to view flight schedules, book flights, and make payments online. Additionally, Velvet Sky may consider expanding its current product line by offering VII luxury flights. Collaboration with other companies could provide additional services such as car rental and hotel accommodation. Regular brand audits should be conducted to ensure there are no gaps in brand management.
