Managing the Mega Merger, American Airlines and US Airways: Branding Strategies Part Three
Share
APEX Insight: In a special web series, APEX contributor Marisa Garcia takes an in-depth look at three distinct airline brand unions. Part three looks at the highly anticipated amalgamation of American Airlines and US Airways that will form the largest airline in the world.
Bringing together two brands is a delicate process under any circumstances, but the challenges are magnified when the brands are both large, with long histories and loyal customers. American Airlines and US Airways have come together to form the largest airline in the world. The announcement of the merger was met with some skepticism, and some of the “new American” brand decisions have been controversial.
At Pains Over the Paint Job
Perhaps none has sparked as much dialogue as the initial decision to decommission American Airlines’ distinctive bare aluminum livery and the double-A eagle logo, designed by Massimo Vignelli, that has been emblazoned on the tails of American Airlines’ aircraft since 1967.
“Design is much more profound. Styling is very much emotional. Good design isn’t – it’s good forever,” Vignelli told Bloomberg Business in 2013 when the current American Airlines livery was revealed. “It’s part of our environment and culture. There’s no need to change it. The logo doesn’t need change. The whole world knows it, and there’s a tremendous equity. It’s incredibly important on brand recognition. I will not be here to make a bet, but this [new logo] won’t last another 25 years.”
Unlike the merger between LAN and TAM Airlines, which resulted in a new unique identity, LATAM Group, the merger between US Airways and American Airlines will see the latter being absolved under the American brand – making it, as Vignelli and others have argued, less necessary to create a new brand image. But on the other side of the argument, Helen Westropp, global business director at the branding and design agency Coley Porter Bell writed in The Guardian, “It’s smart to pursue a branding strategy that explicitly seeks to transfer equity from both merging companies to the new one.”
Smart as that approach might be, American Airlines did something equally clever: It left the final decision of its aircraft’s tail design entirely up to its employees.
Engaging Employees
When asked whether they preferred a tail with the old double -A or the new flag design, about 60 percent of American Airlines employees, 60,418 individuals, voted for the new design. American Airlines has a long history of keeping its employees engaged as its brand involves. In as early as 1934, in an effort to unite the conglomerate of airlines being incorporated under American Airlines Inc., the airline challenged its employees to design a new company insignia and banned professional designers from participating. The winner, Goodrich Murphy, a divisional traffic manager, beat out a thousand entries with an American bald eagle.
Most recently, a special fashion show held at Dallas/Fort Worth International Airport gave cabin crew, pilots and customer service representatives an opportunity to try prototypes of the new uniforms for a “wear test.” Their feedback will help determine American Airlines employees’ new look which will roll out in the latter part of 2016.
By leaving the future identity of the airline up to its employees, American Airlines is sending an important message: It values employee opinions. That translates beyond matters of livery, to more critical matters of operation. The airline’s CEO Doug Parker reinforced the importance of the larger operational issues involved in such a merger and played down the livery decision in the greater context of challenges ahead.
“I do think that airline executives spend far too much time worrying about the livery of the airplane. The customers don’t care about it,” Parker said. “I don’t want to fall into that trap and spend all my time worrying about liveries. I’m not. It’s important to the brand, so it needs to be consistent with the brand. It’s important to our employees, so I care about what our employees think. But, you know, that is not near the top of the list of things we’re worrying about right now.”
Big Brand, Big Changes
Change at both airlines spans beyond a new logo, new livery and website. It includes a $2-billion redesign of its cabin program, in-flight services and its Admirals Club Lounges.
Both airlines’ customer-centric Twitter accounts were ultimately brought under the control of American Airlines’ social media team, which has a well-established reputation for excellence in the industry. The merger has also joined the airlines’ loyalty programs and there are plans set out for the delicate process of consolidating the airlines’ reservation systems and IT infrastructures. By October 17, all US Airways operations under the US Airways brand will come to an end.
Getting the Message Out
Another bold move is the global review of media agreements with advertising agencies McCann Erikson, New York and affiliate TM Advertising, Dallas, which American Airlines has worked with since 1981. Kantar Media estimates American Airlines’ global media spend at $60 million, with $30 million in the US alone over the past year. The incumbent agencies will have an opportunity to bid to keep their business, but American Airlines is sending a message that it is not complacent while reassuring investors that airline managament takes no expense lightly as it works towards long-term financial stability.
“As part of a broader objective since we entered our merger with US Airways, we have begun to do our due diligence to evaluate all major partners to ensure we are receiving competitive and effective service provision,” said American Airlines in a statement. “The competitive landscape of our industry and the advertising industry has changed since the last time we put our business out for bid. We want to ensure we align ourselves with the right agency who understands our goals as the world’s largest airline and can provide the best resources and services to meet our needs globally.”
Slow and Steady
For the benefit of passengers of both airlines, the new American Airlines is introducing change gradually, as it promised to do in 2013.
“The first thing that we’re going to focus on is to make sure that, as we start to introduce changes, we do it in such a way that it is not at all disruptive to the customer,” said American Airlines’ treasurer Beverly Goulet, chief integration officer at the combined carrier. “We are focused and will continue to focus heavily on making sure that comes off without a hitch.”
For Wall Street, the new company has exceeded expectations, reporting the largest quarterly net profit in company history this July ($1.9 billion), and record revenue passenger miles (RPMs) of $21.8 million.
While the “new American” brand story has been monitored under a microscope with some decisions raising brows, American Airlines has been methodical in managing the transition.
Our industry has evolved through a combination of effective alliances, partnerships, and consolidations via mergers and acquisitions. Bringing companies together, regardless of the type of union, presents unique organizational and brand challenges. To better understand these challenges, and how they can be addressed, we assembled a roundtable of the industry’s leading brand gurus for the feature, “The Brands That Bond Us,” coming out soon in The Design Issue. For more on brand mergers, read parts one and two: “Alitalia and Etihad, Separate but Equal” and “LATAM, A Cultural Blend.”