Delta last week completed a three-month study with consultancy McKinsey & Co. and now has developed a plan for how to compete in the low-cost arena. Omnicom Group's BBDO Worldwide, New York, met with Delta about the concept in April, people close to the matter said. BBDO declined to comment, referring calls to Delta. Bcom3 Group's Leo Burnett USA, Chicago, currently handles Delta, which spent $32 million on media last year, according to Taylor Nelson Sofres' CMR.
Delta declined to comment on its strategy, but Aviation Business Daily reported the McKinsey plan will be presented to Delta's board of directors this week, and if approved, will be implemented immediately. The plan reportedly focuses on brand and fare changes, as well as adjusting how Delta deploys its fleet.
One possibility is Delta will refashion its low-fare Delta Express arm with a snazzier name and distinctive brand identity.
"I think they'll certainly try to find a way to make that stand out for them so they can market it separately," said Jim Corridore, analyst at Standard & Poor's.
Express has suffered from lack of brand identification to distinguish it and has received minimal marketing support, a person familiar with the matter said. In 2001, Delta Express received a mere $338,300 in media spending, according to CMR. JetBlue, meanwhile, spent $11.3 million on media in 2001.
BBDO, which lost the Delta account after decades in 1997, would salivate at the chance to pick up that business or even compete for the larger Delta business. One executive said the April meeting was initiated by Omnicom's Diversified Agency Services, which wanted to present its capabilities.
Burnett was said to have run into some trouble with Delta after Olympic advertising in February met with criticism. Both Burnett and Delta had some marketing management shakeups. Lisa Bennett, a key account executive, left the agency in March. In June, Brad Gerdeman, Delta's director of worldwide marketing communications, left. A new team at the airline includes: Jackie Yeaney, managing director-marketing communications, who joined from Boston Consulting Group; Katherine Lu, director of marketing strategy who came from Mc-Kinsey; and Jeff Robertson, director of customer insight and analysis who also came from McKinsey.
"Frequently we do have meetings with agencies, but that by no means means we're in an agency review and in fact we are not," said a Delta spokeswoman, who declined to comment on how the airline would handle an assignment for a JetBlue competitor.
"Leo Burnett's relationship with Delta, as our client has assured us, is business as usual," said a Burnett spokeswoman. "We continue to develop work on their behalf."
The major airlines continue to struggle with the downturn in business travel and low-cost competition from not just JetBlue, but long-time low-cost industry leader Southwest and newer arrival AirTran Airways. JetBlue continues to establish a foothold in the New York-Florida winter business and this winter will boost the number of daily flights to 42 from 27. US Airways last week made a bid to compete by reaching an agreement with Midway Airlines to operate under the US Airways Express flag.
Low-cost is the future, at least in the short-term, according to Standard & Poor's Mr. Corridore. "That's the way the industry is moving right now," he said. "To the extent that they can, [executives at the majors] want to try and restructure their airlines to at least capture part of that" business.
Established airlines have had less luck doing low-cost spinoffs. British Airways started Go to compete with Ryanair and EasyJet, but is now selling Go to EasyJet. KLM's Buzz is faring better.
contributing: laurel wentz and kate macarthur