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Real business #12 Airborne Balloon Flights

Posted Friday, July 15th, 2011 by Neil Edwards

Real Business is a series of posts that analyses the marketing opportunities and challenges of real businesses in the South East. The interviews are undertaken by Keith Lewis of The Courier.

AIRBORNE Balloon Flights does exactly what you would imagine from the title - it operates passenger-carrying hot air balloon flights for paying members of the public - and has been doing so for 23 years.  The company is 95 per cent owned by accountancy-trained Steve Richards; the remaining 5 per cent per cent belongs to chief pilot, Chris Aindow.

From its headquarters at The Hop Farm, Paddock Wood, the company offers flights across Kent and Sussex.  During the flying season, typically between the beginning of April and November, the company will carry about 3,000 passengers, each of whom will have paid out between £89-129 depending on the day of the week. The price includes in-flight champagne, but not photographs, which are available at extra cost.

The company is both profitable and financially sound; it has no overdraft, no debt of any kind and has cash in the bank. Nevertheless, it is facing some stiff challenges. Annual turnover has remained static at around £500,000 for the past three years. One of the main reasons for the lack of growth has been the inability to raise fares because of the widespread pressure on disposable incomes. "In real terms, our fares are lower than they were 10 years ago", said Mr Richards.

A more worrying reason for the price freeze is that the company is now facing fierce competition from internet-only rivals which own nothing, have little by way of overheads, but act as agents for the small independent flight operators. In the current climate, the rivalry to attract customers based on price is unlikely to go away.

Another governing factor is that people tend only to take one balloon ride in an average lifetime, because the usual motivation is to mark a birthday, an anniversary or some other personal landmark. There is not a lot of repeat business.

The imminent problem facing the company is the replacement of two balloon envelopes which are coming to the end of their seven year operational lives - each will cost around £70,000.  He feels his only option is to find one or more sponsors - a company or companies prepared to pay for their logo to appear on the balloon. But therein lies another problem, because as he openly confessed:  "We have no idea how to track down and introduce ourselves to that type of client.  We run a good balloon company, not a marketing company".

Steve Richards recognises that marketing nous holds the key to future prosperity. "We have someone in the office charged with marketing, but they are limited by time, because of other tasks to fulfil, and by knowledge. Because of the increasing pressure on margins, the company is limited by what it can afford to spend. We don't tend to network and we haven't really tried e-marketing. We realise that we are lagging, and that we need to be radical to get off this plateau, but we have yet to find the medium that works for us".

On a more positive note, a constant income flow is provided by the sale of flight vouchers which are available through some of the major High Street retailers, such as W.H. Smith.  Bookings online through the company's two websites - Balloons over Kent and Balloons over Sussex  - are now providing 50 per cent of the total, which is "a step in the right direction".  

Mr Richards concluded: "The company has its own momentum, but is held back by the lack of finance to expand geographically and to replace ageing assets. We are also seen as something of a ‘one trick pony' because we only operate passenger balloons.  We could probably accommodate 50 per cent more passengers without adding to our costs. Volume is the key".

The Marketing Eye says:

To secure sponsorship for the envelope, Airborne Balloons will need to identify specific businesses to approach and deliver an eye-catching and compelling proposition to the decision maker.

The chances are the sponsor will be a medium to large corporate, given the price involved. This method of advertising will probably be new to the sponsor, so the business case needs to be built on the effectiveness of balloon sponsorship versus other media types.

Research suggests that balloons are five times more effective at attracting attention than any other form of media and that the cost ‘per thousand opportunities to see' is lower than that for newspaper, poster, radio or television advertising.  This will all be important in the analysis.

The sponsorship should also be positioned to align with the sponsor's other marketing activities, including hospitality.

Raising the company profile more generally might be achieved by combining attendance at local events, such as festivals and outdoor shows, with a PR campaign.  Balloons invariably draw crowds and would capture the business of impulse purchasers who may not think to book in advance. An ongoing series of articles in the local press will keep ballooning and the company name in the minds of potential clients.

The deal with W.H. Smith looks to be working well and could be worth extending. More prominent positioning in stores or on the W.H. Smith website would be invaluable.

After trading for 23 years, the company should have a rich database of clients who have already enjoyed a balloon flight.  Notwithstanding the trend for it to be ‘once in a lifetime', email marketing and direct mail should be trialled to put the idea back in mind for future gifts for friends and relatives.  Including a special offer especially for these clients will encourage people to act.

What advice would you give?

Posted Friday, July 15th, 2011 by Neil Edwards

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