Deal likely to ground US Airways ads

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Just weeks after it finally took flight, US Airways' much-delayed image campaign may be headed for the hangar.

If United Airlines' proposed $11.6 billion acquisition of the carrier is approved, the US Airways brand will be permanently grounded and the United name and livery will be attached to all US Airways planes and routes. Though a company spokesman denied it, US Airways--the country sixth-largest airline--could halt its new campaign soon, rather than spend the next eight months promoting a moribund brand.

None of which is welcome news at McCann-Erickson Worldwide, New York, US Airways' agency since 1990. (The agency picked up the retail portion of the airline's account to go with brand work in 1996.) Originally set for early 1999, the new image campaign was put on hold as US Airways grappled with labor, maintenance and other problems. McCann already had begun work on a new image effort with a fresh tagline set for later this year or early 2001, an endeavor that also appears over.

The agency refused to comment on the impending merger.

CHANCE FOR MCCANN

It is possible McCann could pick up a slice of the new, post-merger United business, but United recently has expressed strong loyalty to its two roster shops: Fallon, Minneapolis, on the domestic business, and Y&R Advertising, New York, on international.

A Fallon spokeswoman said the agency is unsure how the merger will affect its business at this early point, and that time will tell.

The new campaign is the latest move in recent years by US Airways to burnish its image. In 1997, the airline--which has reported three straight quarterly losses--switched names from US Air and adopted a new logo, featuring an American flag, and a new livery with updated blue and red colors.

But the carrier has struggled to carve out an identity while being besieged by labor troubles, such as a threatened strike by flight attendants earlier this year, as well as maintenance problems and crew shortages that caused delays and canceled flights.

"They don't have a lot of name recognition, passenger ambience or whatever it takes to win people's hearts and minds," said Barbara Beyer, president of consultancy AvMark.

EVERY MAJOR AIRPORT

Not so at United, the world's largest airline, which is renowned for a distinctive U-shape logo known internally as "the tulip." "United and their logo and aircraft can be seen in every major airport around the world," said Steven Lott, business editor of Aviation Daily.

United also spends handsomely on advertising, doling out an estimated $120 million a year around the world. By contrast, US Airways spends considerably less (some $19 million in the U.S. last year) and cut outlays during its recent struggles.

Last fall, United halted its "Rising" effort, sparking rumors Fallon might be on the outs. But the airline stuck with the agency, which in January launched a new initiative focusing on uniting people and playing off the carrier's name with phrases such as "Feel United" and "Be United."

NEW CAMPAIGN ABROAD

Earlier this month, Y&R unveiled a new overseas campaign with the tagline: "Life is a journey. Travel it well." The brand effort sought to promote United's Mileage Plus frequent-flier program as well as its ability to take travelers to all parts of the U.S.

United may be able to expand on that message--both domestically and internationally--after the merger. The acquisition of US Airways was driven by United's desire to gain a foothold along the East Coast, the country's most-flown region. United has long been a stalwart in the Midwest with its Chicago hub and in the West, while US Airways has hubs in Philadelphia, Pittsburgh and in Charlotte, N.C., and operates the US Airways Shuttle in Boston, New York and Washington.

The merger "fills a geographic gap in our network," said UAL Chairman-CEO James Goodwin, who will run the merged company as US Airways Chairman Stephen Wolf exits.

United will take over the high-yield East Coast shuttle and rename it the United Shuttle, giving it shuttle service along both coasts. United operates a shuttle in the Los Angeles and San Francisco markets, as well as in other Western cities. And United will bring more international service into US Airways' three hubs.

"The addition of US Airways routes is only going to strengthen our brand because we're offering more benefits to our customers and more worldwide access," a United spokeswoman said.

But as United gets bigger, it may run the risk of decreased service, especially if it feels it can cut costs with less competition.

"It leaves the door even more open for the niche players of the world," said Michael Glavin, managing director of CMG Communications, New York. CMG is the agency for Virgin Atlantic Airways, a United competitor on flights to London. "Any time the industry as a whole decides it's a price-driven marketplace and price is determined by distribution, you're leaving the door open for service-driven alternatives."

Copyright May 2000, Crain Communications Inc.

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