· Delta steals pole position from American Airlines, brand value up 16% to US$10.1 billion
· Emirates fall to fifth place, giving top four slots to US airlines
· Brand values of all three top ten Chinese airlines strengthen, assisted by late drop in fuel cost
· Budget airlines, Wizz Air, Easyjet, Jetblue Airways, prosper whilst Norwegian Airline falters- brand value drops 7% to US$0.9billion
· Russian carrier Aeroflot upgraded to exclusive AAA+ brand strength rating
Delta is now the world’s most valuable airline brand, as its brand value grew 16% over the past year to US$10.1 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy.
Far East brands hold first class values
New routes, new airports, and new ventures are set to strengthen the performance of airline brands taking advantage of the ever-growing demand for travel in Asia-Pacific. Notable performances from the Far East come from: China Southern (up 10% to US$4.5 billion), China Eastern (up 11% to US$4.2 billion), Air China up 20% to US$ 4.1 billion, Xiamen Airlines which has soared 70% to US$1.1 billion) Air Asia (up 35% to US$1.3 billion) and Korean Air (up 21% to US$1.8 billion). New entrant Spring Airlines, whose brand value of US$0.6 billion puts it in 50th position, is China’s largest low-cost airline.
Boeing 737 MAX 8 impact
Mergers are part of the success story behind this year’s top four American airlines and this healthy growth is likely to continue. Star performer Delta, (brand value up 16% to US$10.1 billion) is currently considering buying Alitalia which will give it access, for the first time, to long-haul flights in Europe. Whilst Southwest Airlines is the fastest growing brand in the top four, (up 24% at US$6.9 billion) the recent grounding of its 737 MAX 8 aircraft following the Ethiopian Airlines crash, could affect it and American Airlines’ returns. Delta however does not use the MAX and may capitalise from the groundings.
EK slips down as BA retains top 10 spot
Whilst leading Middle Eastern airline Emirates (up 17% to US$ 6.26 billion) slips to fifth position in this year’s top ten, it continues to win praise from its customers for its variety of long-haul routes, world class lounges, superb on-board service and punctuality. British Airways retains 8th position (up 20% to US$4.1 billion) and wins plaudits from customers for its airport lounges, flight schedule flexibility, and loyalty reward schemes. Lufthansa, currently in 10th place (brand value up 8% to US$3.14), is looking to extend its share in the lucrative low-cost airline sector. Industry insiders suggest it is interested in buying Norwegian Airlines (down 7% US$0.9billion) or Wizz Air (up 42% to US$ 0.7 billion). Hungarian low-cost airline Wizz Air is said to have the lowest operating cost in Europe.
David Haigh, CEO of Brand Finance, commented:
“Growth in the airline market is dependent on a brand fully grasping and meeting the demands of its customer, something which, with the rise of social media, is constantly evolving. Whilst pricing, routes and service remain central to repeat business, airlines which capitalise on USPs, the huge growth potential in emerging markets and are simultaneously sympathetic to sustainability by investing in more fuel-efficient planes, are the ones most likely to prosper.”
Aeroflot flies high as world’s strongest airlines brand
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
According to this criteria, Russia’s flagship carrier Aeroflot is the strongest brand in the Brand Finance Airlines 50 2019 ranking, with a Brand rating of AAA+ up from AAA last year. The Moscow headquartered brand was also named Best Airline in Eastern Europe for the seventh time at the 2018 Skytrax World Airline Awards.
Aeroflot’s brand value growth of 6% to US$1.5 billion can be attributed to the expansion and addition of new routes to Dubai World Central, Phuket, Marseille and Palma Mallorca. The group has an ambitious aim of carrying 100 million passengers by 2023, marking the 100th anniversary of the group and Aeroflot brand. Crucial steps towards achieving this goal will be for the brand to continue its focus on investment in sustaining brand strength and therefore upholding its AAA+ rating through to the following year.
Note to Editors
Every year, leading brand valuation and strategy consultancy Brand Finance values the world’s biggest airline brands. The 50 most valuable airline brands in the world are included in the Brand Finance Airlines 50 2019 ranking.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Airlines 50 2019 ranking.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671. Brand Finance is a chartered accountancy firm regulated by ICAEW and also the first brand valuation consultancy to join the International Valuation Standards Committee (IVSC).
The methodology used to produce the annual Brand Finance rankings of the most valuable and strongest brands across all sectors and countries has been certified with the Marketing Accountability Standards Board’s (MASB) Marketing Metric Audit Protocol (MMAP).
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.