Qantas using crisis to build reputation

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Through the clouds above a freezing cold London sky it appeared first as a giant shadow and then gradually took form. Only after it landed at Heathrow could anyone make out the red and white livery and the Kangaroo on its tail. Qantas’ first A380 flight since one of its fleet suffered engine trouble over Indonesia on 4 November had landed.

And one of the first passengers off the plane was Qantas CEO Alan Joyce. It is Joyce, a 44-year-old Irishman, who has personally taken control of the airline’s reputation during the severe turbulence that has surrounded it in recent weeks.

First were the problems with Qantas’ all-important new A380 fleet. Next, two pilots made allegations about outsourcing and the impact it was having on quality control at Qantas. Those comments were echoed on Monday when an anonymous member of an Australian trade union again suggested that Qantas’ fleet was poorly maintained. And worse was yet to come. While Joyce was mid-air over the weekend another Qantas flight to London, this time a 747, was cancelled after an electrical fault.

It’s a mighty set of circumstances to manage - and yet the smart money remains on Joyce riding out the storm. For starters, the past three weeks have witnessed a masterful demonstration of crisis management. As soon as the A380 emergency hit, Joyce took direct control. It was a lightning quick response and one in which he immediately placed the emphasis on the aircraft’s Rolls-Royce engines and not on Qantas’ service record.

That means reinforcing and reiterating the message behind the so-called ’Rain Man moment’

More than a dozen media interviews have followed and each time his emphasis has been on Qantas’ safety record and on communicating updates and reassurance to concerned passengers. Flying on the first A380 since the safety scare is the final touch on what many are hailing as a textbook crisis management performance from Joyce.

Review the past quarter century of brand crises and the following ratio of about 16:3:1 emerges. For 80% of brands that undergo a crisis - like the current tribulations of Toyota - the emergency does enduring damage to brand equity and results in declining sales and profitability. For 15% of crisis-hit brands - like Maclaren which underwent a severe crisis last year with its baby strollers - the best result it can achieve from its crisis management response is to re-emerge with its reputation intact and sales eventually back to normal.

For Joyce and Qantas, however, the objective is much more ambitious than to simply return the brand and its bottom line to pre-crisis levels. Joyce wants to be part of the 5% of brands that actually build brand from a crisis, as the comments he made last week on Australian TV indicate: “These issues demonstrate a strong positive safety culture, because when we found out a problem with an engine that had a design issue, we grounded the fleet until we knew how we could fix the issue. I think it’ll actually do our brand really good in the medium to long term.”

Yes, that’s right. Joyce is going to build brand equity from the crisis, not just recover it. Students of PR will know this as the famed “Tylenol 180” strategy named after the painkiller brand that not only recovered from a poisoning scandal in the Eighties but went on to increase sales and brand equity as a result of the way it handled the subsequent fallout.

The key to Tylenol’s success, and Qantas’ ambitions, is to ignore the very generic PR doctrine that tells all brands to act the same way in a crisis and to use brand positioning to guide the response in a very specific direction.

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For Qantas, that means reinforcing and reiterating the message behind the so-called “Rain Man moment” when Raymond Babbitt - the character played by Dustin Hoffman in the Oscar winning 1988 movie - proclaimed that he would only fly Qantas because it was the only airline that had never crashed.

Qantas, like all major airlines, did suffer several fatal crashes early in its history but the perception has stuck and the quote from Hoffman’s character combined with almost six decades without a fatal accident has built an image of infallibility and reliability around Australia’s national airline.

For Joyce, the big challenge is how to use this current crisis to reinforce rather than retract his brand’s safety pedigree. On his side, brand perception and a very deep reservoir of brand equity that many of Qantas’ competitors can only dream of. Recent innovations like instantaneous check-in, immediate baggage drop-off and the funky elan of Mark Newson’s designs for the airline have left Qantas light years ahead of most European carriers.

At least that’s what I am telling myself dear reader. Because I am writing this from Qantas’ first class lounge in Melbourne waiting for a 747 to take me home to London for Christmas. Rarely has a columnist wanted to believe his words so badly as now.

Readers' comments (7)

  • I've just returned from 2 years down under, and I have to say the reputation of Alan Joyce and what he has been doing with Qantas is quite a surprise compared to the usual British sagas of Ryanair aggression and BA chaos.

    Strategically Qantas played a blinder to kill off their low priced rivals Virgin (so much so the brand issued a profit warning earlier this year) and their current brand equity is booming down under.

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  • Let us know when you get home safely Mark. Your Mum will be worried!

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  • I couldn't agree more. The reason why Qantas has a sporting chance of emerging from this crisis with its reputation enhanced is precisely because it is managing the incident in a way which reinforces the brand essence. It's also why organisations which manage crises in a way counter to their brand (or which suffer a crisis that casts doubt on the veracity of the claimed brand values) are likely to suffer the most damage. in my view, BP and Toyota both fall into the latter category.

    Jonathan Hemus
    www.insigniatalks.com

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  • Perhaps Qantas is more accurately described as a brand that one the one hand is cleverly using a crisis to build brand equity whilst on the other hand is giving it away through forgetting to ensure the basics are in place when customers really need them.

    I don't know whether Dorman has any brand management credentials, but the points made in his article http://www.theage.com.au/travel/blogs/travellers-check/ill-never-fly-qantas-again-death-of-an-iconic-brand/20101129-18cq5.html ring true, and point to a brand that is missing an opportunity to sustain equity with customers when it matters most: at the point of delivery failure.

    Let's face it - aeroplanes are complex machines and are bound to have problems from time to time. A good airline will do what Qantas does - land the plane, cancel the flight etc. A great airline will ensure sufficient follow through on the ground to minimise the hassle to their customers. To ensure it doesn't fritter away valuable equity that Joyce is building up it needs to keep an eye on the whole picture - not just the biggest headline issues.

    Safe travels Mark and Merry Christmas.

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  • The move today to sue Rolls Royce makes financial sense, but it also ties in with the smart way Qantas are handling this in terms of Brand.

    They are "briefing against" Rolls Royce to distance their brand from the problem, while building it by pointing to their quick response.

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  • Great post Brand Man(!)

    For anyone interested in a refresher, there's a great case study on Tylenol here:

    http://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson%20&%20Johnson.htm

    By the way, I'm an excellent driver.

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  • Interesting article. Where do you get the stats for the ratio of 16:3:1 from?

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