Delta

Delta is WINNING in the Georgia Tax Tussle

Nader AshwayLeave a comment

delta_georgiaLast week, the Georgia legislature rescinded a tax break proposal that would have meant approximately a $50 million savings on jet fuel taxes for Delta Air Lines, the state’s largest private employer.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…

Five Reasons for a Delta/AT&T cobrand

Nader Ashway2 Comments

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If you’re a business traveler who spends any appreciable time traveling, you understand the typical challenges: commercial transportation, even in its most streamlined forms, can be a lot of work. Especially if you’ve got a lot of work to do while you travel.

Some commercial carriers now offer wi-fi as a feature of their offerings. In particular, Delta Airlines touts that they proudly offer wi-fi on all flights (with a few restrictions based on the aircraft used on certain legs.)

Unfortunately, the wi-fi offered is painfully slow and doesn’t perform in any manner even remotely resembling acceptable. In some cases, the wi-fi isn’t available at all. This is especially infuriating on longer flights – like New York to Seattle, for instance – when you hope to strike several items from your to-do list, and make those hours productive.

We understand why Delta would offer wi-fi (through a fulfillment partner Gogo Inflight) services. It’s a great way to differentiate from competitors, and it gives the brand another feature to promote to consumers. And not just about targeting business travelers – even today’s average non-business traveler is in need of good wi-fi.

But when Delta can’t deliver on even the most basic version of that promise, they are losing esteem in the minds of their consumers, (this one included,) and thereby damaging their brand in the process.

This is a perfect market condition for a cobranding opportunity. If Delta dumps Gogo and partners with AT&T to deliver on an important and desirable brand feature, everybody wins. Let’s explore how.

Here’s loosely how it works: AT&T wires up all Delta flights with soon-to-be-ubiquitous 5G broadband wireless (serious network capability that’s actually really fast even when everyone is connected,) and now that they own it, AT&T can even deploy their DirecTV service into the flights where there are screens on the seats.  Great way to preview the new network, and better way to innovate (since you’d have to be creative with how to get good-sized beacons into typically tight spaces with the rest of the avionics configuration) on the installation.

What might happen in such an arrangement? The answers are five good reasons Delta and AT&T should cobrand:

  1. Consumers would enjoy a far better, far more productive online experience while flying Delta. If you’ve ever had to deal with slow or spotty wi-fi, you know how frustrating it can be. Smooth and fast connectivity that allows business people to connect to emails or shared docs and enables kids to stream movies would simply make for a stronger overall experience while flying Delta.

  2. Those consumers would form positive brand impressions about both Delta and AT&T. Smooth flights with lots of productive connectivity and streamed entertainment options that are delivered without incident looks good on both brands. This is especially true for AT&T, who is in a near-constant dogfight with Verizon for perceptual wireless network preference.

  3. Delta gets to deliver a category differentiating benefit at no carried or additional operational costs. Without assuming massive operational dollars to implement this arrangement, Delta would leapfrog its competitors with this feature. Sure, JetBlue has in-flight entertainment (ironically delivered by DirecTV,) and sometimes wi-fi, but a fully thought-out super high speed network for everyone to share would help the brand stand apart from its national rivals like United and American in a meaningful – consumers actually desire this feature – and powerful way.

  4. Although AT&T would assume the operational costs of outfitting every Delta jet with their hardware, the brand would receive (basically) free exposure to Delta’s 180 million yearly passengers. Yup I said 180 million. That’s a lot of top-of-the-funnel preference for nearly all of AT&T’s business units built around the network. If they want to beat Verizon’s brains in, getting in front of 180 million passengers and basically making their travel day is a really fine way to start. How about leveraging that exposure with juicy offers to switch to AT&T wireless for your mobile phone service, or similar offers for Sunday Ticket and other DirecTV enticements?  Did I mention 180 million passengers per year?

  5. Both brands would enjoy the benefits of individualized responsibility. Under this arrangement, Delta would only be responsible to its consumers for on-time flight performance and in-cabin service, and NOT the quality or uptime of its wi-fi. When it’s co-branded with a reputable and well-known name, Delta can actually get away with saying the wi-fi is “AT&T’s problem.” With Gogo, (a smaller player with far less brand visibility,) the average passenger assumes it’s Delta’s wi-fi. Conversely, AT&T gets to take all the credit for great wi-fi and entertainment and none of the guff for flight performance or on-time arrivals. A win/win indeed.

While we’re matchmaking, I might also propose that Amtrak and Verizon enter into the same type of arrangement. Have you ever tried to connect using AmtrakConnect? As they say in the business, “oy.”

Now that the business end is settled, all we need is a good tagline. Any ideas?