Delta is WINNING in the Georgia Tax Tussle

delta_georgiaLast week, the Georgia legislature rescinded a tax break proposal that would have meant approximately a $50 million savings on jet fuel taxes for Delta Air Lines, the state’s largest private employer. This came in direct response to Delta’s announcement from February 24th, which read in part:

“…the airline will end its contract for discounted fares for travel to the (NRA) association’s 2018 annual meeting… Out of respect for our customers and employees on both sides, Delta has taken this action to refrain from entering this debate and focus on its business. Delta continues to support the 2nd Amendment.”

To be clear, Delta did not end its relationship with the NRA, or NRA members. It simply removed a special discount as a perk, and stated its rationale in fairly certain terms. NRA members are free to fly Delta any time they like.

Delta, like any brand, made this move and released this statement partly due to its convictions, and partly for the timely optics.

And several brands, including Dick’s Sporting Goods, Walmart, Hertz, MetLife and United Airlines, have also taken steps – some far more significant than Delta’s – to either enter or remove themselves from the fray surrounding this percolating national conversation.

In response to Delta’s statement, Georgia Lt. Gov Casey Cagle tweeted:

“I will kill any tax legislation that benefits @Delta unless the company changes its position and fully reinstates its relationship with the @NRA. Corporations cannot attack conservatives and expect us not to fight back.”

The Georgia senate followed through, and sitting Governor Nathan Deal signed the bill on March 1st.

This is also an optics play for Georgia, the brand.

Mr. Cagle, the man who authored the tweet and led this movement into law, is seen as the frontrunner for the Republican gubernatorial nomination, as Georgia enters an election year with primaries in May and a general election in November.

Some rash-thinking practitioners might suggest that Delta leave the state, and the 33,000+ residents it employs, to make a bold(er) statement. That would be an arduous task, complicated by the fact that Delta just renewed their lease on Hartsfield-Jackson International Airport, the world’s busiest, for a 20-year term. And while it might be a windfall for any other city, (what’s up, Nashville?) it might be seen as a petty slight against tens of thousands of workers, based on politics. (Not a great brand play.)

Financially, the new taxes, while significant, probably won’t hurt the company as much as one might think. Delta has laid out a long-term plan to spend between $2 billion and $3 billion per year on aircraft replacement and other capital upgrades. The $50 million in fuel taxes will likely be factored in to that budget.

From a marketing and brand sensibility, Delta doesn’t have to leave Georgia just to make a wildly expensive point. The brand “won” the optics game by sticking to its guns (reverse puns intended) on this polarizing issue, and then getting punished for it.  Those who are watching brands at this time will have taken notice, and will be impressed by its fortitude to stick to its promise as a service provider.

And now that they’re paying for that decision, both literally and figuratively, their marketing job has gotten quite clear: stand by our principles, continue to conduct business to the best of our abilities, and enjoy (and selectively promote) the wave of earned media this whole issue has garnered.

Delta can now leverage the opportunity to create a new bond with their Georgia employees with a “we’re sticking with you, no matter what it costs us” message. That’s also a strong brand move.  Think of the wave of pride and support that will generate internally.

My guess is that CEO Edward Bastian is filming that message any day now…

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