American Airlines and United Airlines have signed major corporate licensing deals-the first in the airline industry.
Working with Leveraged Marketing Corp. of America, New York, No. 1 United plans to license its numerous trademark names including United, Business One, Connoisseur Class and Shuttle by United.
"United's image and name are internationally known and respected, and so very valuable," said Dick Veatch, staff executive-promotions/Latin American advertising, in an internal newsletter. "Whatever proceeds are generated from the use of our trademark names is pure owner's profit. I believe this agreement promises a million dollar a year potential for the company."
American plans to put its corporate logo on products like kid's pajamas, hair dryers, collectibles, computer software, videogames and playground equipment. It is developing a long-term licensing program with Equity Management, Chicago and San Diego.
"We did some core value studies and came up with positive things about our trademark including high quality and leadership," said Mayda Wells, American's manager-special sales programs.
Products could begin appearing on store shelves within 12 to 18 months. American already has a luggage line bearing its logo.
Marketing consultants don't expect the American brand name to suffer even though its American Eagle commuter operation has had two planes crash in less than two months, the most recent last week near Raleigh/Durham, N.C. American itself has one of the best safety records.
Responding to safety concerns, U.S. Transportation Secretary Federico Pena last week ordered a safety audit of the nation's airlines and within 100 days will raise safety standards for commuter aircraft to the level of those imposed on large carriers.
Good will and positive imagery gained through licensing is bound to help American and United.
Still, there is a risk-especially if the products aren't a good strategic fit or if they don't live up to the licensed corporate name.
"Unless it's done correctly, it can hurt the brand," said Laura Huffman, VP-account planning at Equity Management, San Diego. "Corporate trademark licensing, already representing 35% of the industry, is the fastest growing area. It allows companies to introduce new products that leverage their brand name without spending an enormous amount of research and development dollars in categories where they might not have expertise."
So far, only London-based Virgin Group, parent of Virgin Atlantic Airlines, has aggressively extended an airline brand name-primarily through joint ventures rather than licensing. Soon consumers will see Virgin cola and Virgin vodka and its only licensed product to date, a multimedia personal computer.
Juliana Koranteng contributed to this story.