Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Best Practices: Navigating the Airline Category - IEG Sponsorship Report

Best Practices: Navigating the Airline Category - IEG Sponsorship Report

Ratings: (0)|Views: 509|Likes:
Published by awagoner5044
Article
Article

More info:

Published by: awagoner5044 on Aug 20, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

11/26/2014

pdf

text

original

 
CATEGORY UPDATE
Best Practices: Navigating The AirlineCategory
Industry consolidation and new activity by global carriers lifts spending to new heights.
July 15, 2013
When it comes to sponsorship, few categories haveexperienced more ups and downs then the airlineindustry.The primary culprit: industry consolidation.Continental Airlines, Inc. and UAL Corp.—theparent of United Airlines—merged in May 2010 toform United Continental Holdings, Inc., whileSouthwest Airlines Co. in 2011 closed on itspurchase of AirTran Airways.More recently, Delta Air Lines, Inc. in Junepurchased a 49 percent stake in Virgin Atlantic Airways Ltd., while American Airlines, Inc. plans to completeits merger with US Airways Group, Inc. in the third quarter of 2013.While that activity has taken a number of brands off the table—Continental, AirTran and, as of later this year,US Airways—some companies have increased the use of sponsorship to build their presence in newmarkets.For example, Southwest Airlines has signed a handful of deals to build its presence in former AirTranmarkets. The company earlier this year converted Charlotte, N.C., Portland, Maine and six other marketsunder its corporate banner and will rebrand four more by the end of the year.New ties include the May 23-25 Food Lion Speed Street presented by Coca-Cola in Charlotte and the June 9Old Port Festival in Portland, Maine.The company uses sponsorship to tap into local passion points and educate consumers about the Southwesttravel experience, said Andy Allmann, Southwest’s director of customer engagement and partnershipmarketing.Southwest in August will convert Grand Rapids, Mich. followed by Memphis, Pensacola, Fla. and Richmond,Va. in November.Properties also are positioning themselves to take advantage of M&A activity. Madison Square Gardenhopes to leverage its four-year-old partnership with Delta Air Lines to secure a tie to Virgin Atlantic.
Southwest sponsors events in 15 to 18 cities each year,with Atlanta, Chicago and Denver representing growthmarkets.
 
Justin Johnson, MSG’s senior vice president of partnership strategy, likens the potential partnership to theconsumer packaged goods category where companies frequently sponsor on behalf of their corporatemoniker and individual brands.“Virgin can come in under the Delta umbrella and get different points of activation. Naturally they’ll want toplay in the world’s most famous arena.”Virgin’s rights fee would be incremental to Delta, he added.While industry consolidation can lead to new deals, it can also result in marketing inertia as companies focuson integrating management and organizational structures.Tony Schiller, executive vice president with Paragon Marketing Group, recommends that properties take aproactive approach to activation when working with companies that have recently undergone a merger.“In normal times sponsors typically develop activation plans, but they may not have that latitude during theintegration process. As a result, they may be more responsive to activation ideas.”Paragon worked for 14 years with Continental Airlines and two years with United Continental Holdings.
International Carriers Broaden Prospect Pool
New spending by global carriers is driving additional deals across pro sports, marathons and other types of events in the U.S. market.Case in point: Etihad Airways recently announced a partnership with the Events DC Nation’s Triathlon, a tie itis using to promote the launch of daily service to Abu Dhabi out of Dulles International Airport.Etihad is activating the Sept. 8 event with a promotion dangling a trip to Abu Dhabi and entry into the Tri YasTriathlon, an event it also sponsors.Etihad joins Emirates, Turkish Airlines, Aeroflot and other international carriers using sponsorship to elevatetheir positioning in the U.S. and abroad. And some of those companies are spending significant money: Emirates over the past two years haspartnered with a handful of U.S. properties including the NASL New York Cosmos and the USTA EmiratesU.S. Open Series, the latter of which cost a reported $90 million. And other global carriers could soon enter the U.S. sponsorship scene.“Over the next three to five years I expect to see multiple international carriers investing in the U.S. market,”said Schiller.One potential beneficiary: The four major U.S. pro sports leagues. The category has been open across all of the leagues since Southwest dropped the NFL in 2010.In a sign that things could soon change, the NBA reportedly was speaking with Emirates earlier this year about a league-wide sponsorship. Emirates last year sponsored the NBA China Games, a tie that is expectedto be renewed.
The Top 10 U.S. AirlinesAirline2012 enplaned passengers 2011 enplaned passengersDelta
116.4 million113.4 million
Southwest *
112.2 million110.5 million
UA/CO combined
92.3 million95.6 million
 
(United)92.3 million50.4 million(Continental)-45.1 million
American
86.3 million86 million
US Airways
54.2 million52.9 million
EV/XE Combined
32.3 million30.4 million(Express Jet)32.3 million16.1 million(Atlantic Southeast)-14.2 million
JetBlue
28.9 million26.3 million
SkyWest
26.1 million24.4 million
AirTran
21.7 million24.5 million
American Eagle
18.7 million17.3 millionJanuary-December 2012 scheduled domestic and international enplanements. *Southwest and AirTranreported as separate carriers with the exception of financials. Source: Bureau of Transportation statistics.Below,
IEG SR 
highlights four hot buttons in the airline category.
Gain business from sponsored properties.
 Airlines are increasingly placing more focus on gainingbusiness back from sponsored properties.Gaining business is a key driver for United Continental, sources say.“The new leadership looks at sponsorship as a revenue-driving vehicle. They’re not as heavily invested inactivation as they were in the past,” said a contact close to the company.United joins other companies looking for business from sponsored teams. US Airways in 2011 expanded itslong-running partnership with the MLB Arizona Diamondbacks by providing transportation for the team.US Airways has two contracts with the team: one for marketing, the other for charter service.“The cost of charter service is hard to pin down. It’s never been a negotiating point that we have used insponsorship negotiations,” said Cullen Maxey, executive vice president of the Diamondbacks.In a different twist, Madison Square Garden tries to facilitate business-building opportunities with other sponsors.“Business-to-business is a huge driver for the airline category. We want to introduce Delta to our partners,”said Johnson.
Engage frequent customers.
Nearly every airline uses sponsorship to access perks that can be used tosupport loyalty programs.For example, American Airlines activated the South by Southwest Music, Film and Interactive Conference topromote BusinessExtrAA, while JetBlue activated University of Southern California athletics with tailgateevents for TrueBlue members.“The opportunity to use sponsorship assets to engage high-yield, high-loyalty customers is very valuable,”said Schiller.
Promote co-branded credit cards.
 Airlines should try to secure pass-through rights for co-branded creditcards when negotiating contracts.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->