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Category Update

Changes In Airline Industry Create Tailwind For Sponsorship Deals

Southwest Airlines has a first-time deal with minor league baseball’s Greenville Drive to promote its new service to the Greenville-Spartanburg, S.C. market.

Airline objectives include establishing brands and promoting loyalty and other marketing programs.

Although the one-two punch of industry consolidation and the escalating price of oil have created some turbulent times for airlines and passengers alike, sponsorship activity has continued to increase and stands to benefit from the first of those factors.

With business and leisure travelers returning to the skies as the economy recovers, nearly all of the major carriers in the U.S. have expanded their sponsorship portfolios over the past year. Those deals include pro sports teams, community events and nearly everything in between.

What’s more, the recent round of mergers in the category is expected to drive more activity as companies look to promote new brands and operations.

At United Continental Holdings, Inc.—where United will become the single airline brand—those connected to sponsorship decision-making at the former United Airlines and Continental Airlines, Inc. expect the consolidation of those functions to be finalized in the next few months.

For their part, Southwest Airlines Co. and AirTran Holdings, Inc. just closed their merger on May 2, with the elimination of the AirTran brand not beginning until next year (see Sidebar).

The flurry of recent activity in the category includes Frontier Airlines’ new partnership with the LPGA, its first national sponsorship. The airline was purchased in 2008 by Republic Airways Holdings, Inc.

In addition, JetBlue Airways Corp. this year came on board as a first-time sponsor of New York City’s Tribeca Film Festival, while Delta Air Lines, Inc. just took two-year title of MLB’s Civil Rights Game in Atlanta and expanded its partnership with U.S. Ski and Snowboard Assn. with a tie to the NGB’s new U.S. Freeskiing unit.

On top of that, United has signed new multiyear deals with the MLB Los Angeles Dodgers and San Francisco Giants and renewed an existing partnership with the Chicago Cubs.

As in years past, airlines are sponsoring primarily to accomplish four primary marketing objectives: boost visibility in new markets, demonstrate community support, build relations with frequent business fliers and gain business from sponsored properties.

As an example of the last two objectives, United’s new MLB partnerships include entitlement of club suites and other exclusive members-only areas, as well as team charter service.

In addition to domestic carriers, U.S. properties also are seeing more interest from sponsors based outside the U.S., such as Emirates Airlines, which last year inked a tie with USA Rugby.

“More and more international brands are looking to extend their presence in the U.S., which could lead to unique opportunities for those properties that appeal to a global audience,” said David Wright, vice president of global sponsorship with Soccer United Marketing, Major League Soccer’s marketing arm. American Airlines has sponsored MLS since 2008.

Soccer United Marketing, Tel: 212/450-1200

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Q&A With Southwest Airlines’ Andy Allmann

In light of the recent activity in the category, IEG SR checked in with Andy Allmann, director of national strategic partnerships for Southwest Airlines Co., a company that has long used sponsorship to connect with consumers and support the passion points of the communities it serves.

Below are edited excerpts from the conversation.

IEG SR: Southwest recently closed on its acquisition of AirTran Holdings, Inc. How might that impact your sponsorship activity?

Allmann: We closed the deal May 2, so we are only in our second week. We had one of their marketing folks here today to provide an update on the types of things they are doing.

They have done a fantastic job. Their marketing staff is only about 30 folks and they have built a really great brand. We are excited to have them as part of the family.

The AirTran brand will continue until 2012 at the earliest and I don’t think anything will change in the foreseeable future.

IEG SR: Southwest operates in 37 U.S. markets. Which do you focus on when it comes to sponsorship activity?

Allmann: Some of our key markets include Denver, Boston, Chicago, Philadelphia and the Baltimore/Washington, D.C. area.

IEG SR: Southwest sponsors the NBA Boston Celtics, Phoenix Suns and other pro sports teams. How do you typically activate those partnerships beyond signage and ticket giveaways?

Allmann: Last year we focused on customer acquisition, so we ran promotions to encourage consumers to sign up for our Click ‘n Save special offers and Rapid Rewards frequent flier program.

We also use hospitality for our corporate sales group and have an online presence on each team’s Web site. People can click on the team’s schedule page to access the Southwest home page.

IEG SR: Does Southwest have any new initiatives this year?

Allmann: We launched an enhanced Rapid Rewards program on March 1, so we continue to focus on acquiring new members. We also have something else up our sleeve that I can’t announce yet. It’s not necessarily sponsorship related, but we may leverage our current sponsorships to gain some promotional opportunities.

IEG SR: Has Southwest recently entered any new markets? Are there new sponsorships in those markets?

Allmann: Greenville-Spartanburg, South Carolina is one of our newer markets. We signed a new partnership this year with minor league baseball’s Greenville Drive. Last year we signed a two-year partnership with Clemson University.

We partnered with Clemson prior to entering the market. We had some signage at football games, but we couldn’t activate with ticket giveaways and that sort of thing; we didn’t enter the market until March of this year.

IEG SR: Has Southwest signed any other new ties in the recent past?

Allmann: On the national level we have a great partnership with Microsoft. We worked with them on a holiday promotion last December.

We had Santa Claus at 26 airports and customers had the opportunity to have their photo taken for free. Microsoft had on-site kiosks to demonstrate their Photo Fuse software. Our customers loved it.

IEG SR: How did such a non-traditional partnership come about?

Allmann: We have worked with 206, Inc., Microsoft’s Seattle-based agency. We have worked with Levi Strauss & Co.’s Dockers brand, which is another one of 206, Inc.’s clients.

We ran a Father’s Day promotion where we gave Dockers to fathers on our flights. 206, Inc. brought us the opportunity with Microsoft.

IEG SR: Has the increase in oil prices impacted your marketing activity?

Allmann: Yes, we have felt it. We have to make sure what we are doing is the right thing for the right reason.

It’s not that we weren’t doing that before, but you have to take extra precautions. “Do we need to spend this money, and if so, what kind of impact will it have?” It’s not that we’ve slashed our budget, but we need to double check everything to make sure we are doing the right things for the business.

Southwest Airlines Co., Tel: 214/792-4000

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