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CONTINENTAL LITE FUTURE BLEAK UNDERPERFORMING NO-FRILLS BRAND MAY REMAIN ONLY IN TEXAS, EAST

By Published on .

Continental Lite is on its way out as a no-frills, low-fare national brand.

Under recently appointed CEO Gordon Bethune, Continental Airlines is restructuring operations, and early indications strongly suggest Continental Lite's future is bleak.

Several travel agents were told that Continental Lite is being phased out and likely will be gone this year. One executive close to Mr. Bethune said to Advertising Age: "Continental Lite as a separate, branded entity is dead."

Further, Senior VP-Marketing Don Valentine has been reassigned to the new post of senior VP-corporate planning. Marketing staffers now report directly to Mr. Bethune.

A Continental spokesman would only say that the short-haul route network is changing as the carrier analyzes which routes are underperforming.

"The bottom line is that we are reassessing all the routes we fly with an emphasis on sticking to those where we are doing the best," he said.

Continental apparently is considering keeping the Lite concept for its nine shuttle markets in Texas and the East Coast where the no-frills service is strongest. One travel agent was told that two different "trains of thought" are under review as the company overhauls its operations.

In July, Continental finally gave its "airline within an airline" a brand identity under the Lite name. The service, introduced in October 1993, was patterned after Southwest Airlines to capture part of the growing and lucrative short-haul market.

After belatedly giving the product an official label, new ads from the Richards Group, Dallas, hailed the "Lite" name along with a new logo painted on designated aircraft, new flight attendants' uniforms and airport signage.

Some $30 million-or half of the airline's total marketing budget-was committed to the expanding Lite brand.

Company officials said then that within six to 12 months, Lite service would account for 40% of domestic capacity. (Now, it's less than 30% and shrinking.)

Then the dismal numbers came in, and by October, Lite's chief proponent, Robert Ferguson, was eased out as CEO. Continental Lite failed to make a profit.

"The airline is clearly shifting direction under a new CEO," said one executive close to Continental.

That direction is likely to revolve around the carrier's "More airline for your money" tagline.

"My guess is that Continental Lite is going to go away," said Jack Trout, president of Trout & Partners, a Greenwich, Conn., consultancy that has done work for Continental. "I think they're going to come back to just Continental and try to hang in there on a value positioning."

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