The crash of two 737 Max, followed by a seemingly never-ending sequence of new issues and delays in fixing the troubled plane, has cost the company billions and eroded a substantial amount of trust in the safety of its newest aircraft and consequently, its brand equity.

Then came the pandemic.

Just as it does to people, it hit companies with pre-existing conditions dramatically harder. With intercontinental air travel at a near standstill, and a drastic reduction in domestic travel, airlines are selling planes they do not need any more and have stopped buying new ones.

For Boeing, already in deep trouble, this led to a major crisis. As The Wall Street Journal reported on July 29, Boeing announced a staggering loss of US$2.4 billion in the second quarter and plans to become smaller to save cost and adjust to the new reality of less commercial demand over the coming years. When a brand loses trust, especially in such a sensitive area as air travel, customers will leave. They leave entire segments, and they leave specific brands.

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When people don’t feel safe, they don’t travel. They may feel unsafe because they don’t trust a particular aircraft brand, and especially in these unprecedented times, they fear that they can get infected by the coronavirus at the airport or during a flight. Safety, once assumed by so many as a given, becomes a luxury once it’s not seen as ubiquitous any more. And this has consequences.

In the second quarter of 2020, a tectonic shift happened. Boeing lost its number one position as the top plane manufacturer in the US to General Dynamics’ Gulfstream brand. While Boeing was only able to sell 20 commercial aeroplanes, Gulfstream sold 32 of its ultra-luxurious private jets to customers.

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It is unprecedented in the history of aviation that a private jet company outsells a large commercial aircraft manufacturer, and this shows how trust and safety have become extreme value drivers. Luxury brands have to create an extreme amount of value for their consumers, and right now in aviation, they can do that through safety. During the time of an infectious disease outbreak, it makes a difference in perceived safety if you can travel on your own with your loved ones or if you need to travel in cramped conditions up close to strangers in a large aircraft.

In fact, the idea of protection from the general public is one of the hidden drivers of luxury that I identified in my luxury research. Many people still think that status is the main rationale to purchase luxury, but other hidden factors are much more significant value components. The perception of being protected from others is one of the main reasons for people paying the significant price points for luxury goods and services.

This is important because most luxury brands focus their attention mainly on visible and tangible aspects and neglect why people buy intrinsically. They focus on features and forget the story. The pandemic exposed this clearly.

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The demand for private aviation all over the world is at a peak. In many places, it is impossible to get hold of aircraft. In contrast, many commercial planes are flying empty because of lack of demand, and the number of commercial flights, for example, within the US, is at all-time low.

When there is no trust and no feeling of safety, then there is no value creation. Without value creation, there is no demand. In contrast, private aviation as a category sees a higher demand because of the extreme value it creates by protecting its passengers.

All luxury brands can learn from this. A crisis is always an opportunity for luxury brands to refocus their attention on hidden value drivers. Understanding the precise mechanics of extreme value creation has never been more important.

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