By James Pilcher
Enquirer staff writer
Amid the increasing drumbeat of reports on possible bankruptcy, Delta Air Lines on Wednesday said it has hired a new advertising firm.
But the struggling airline's chief marketing officer says the move to take on ad giant Ogilvy & Mather Worldwide is as important as any when it comes to Delta's long-term survival.
"We are trying to do a transformation of our company and our brand," Delta senior vice president and chief marketing officer Paul Matsen said. "And that transformation will reshape many, many aspects of the customer experience over the next several years.
"So when one asks is advertising important in these times, I say absolutely."
Delta has lost nearly $6 billion in the past three years, and may be close to a Chapter 11 bankruptcy filing. The Atlanta-based carrier, whose second-largest hub is at Cincinnati/Northern Kentucky International Airport, is trying desperately to slice costs through job cuts, pay reductions and possible concessions from its main union - the pilots - as well as debt holders.
Matsen would not comment on the ongoing negotiations with the pilot union. Those talks continue this week over work rules and could broaden to a full package soon, union officials said.
But Matsen said the company needs to keep passengers coming to Delta, and that the carrier will continue to advertise heavily. He said Delta spends between $30 million and $40 million annually on advertising, a figure that should stay steady.
Matsen said Ogilvy, one of the largest ad firms in the world, was selected from a field of 10 firms because of its experience with Fortune 500 companies such as Gillette, American Express and BP. Matsen cited IBM's transformation through advertising from a technology hardware company to a software solutions company.
A new campaign is set to begin early next year.
"We are going after five core attributes," said Matsen, citing simple, stylish, inviting, comfortable, and affordable as the messages the company is looking to portray.
Part of the initial changes have already been unveiled in Cincinnati with the new SimpliFares ticket structure and surrounding ad campaign launched in August.
Nearly two months later, the company continues to spend money on advertising here - including spots as recently as Tuesday night on Major League Baseball broadcasts and targeted Web sites. That's a departure from past practice when the company all but ignored one of its biggest hubs in its campaigns.
"We are committed to our key markets, and in places where we think we can win," Matsen said.
The local effort, which is costing more than $2 million, has helped spur local traffic for Delta, which previously had been losing market share as fliers used surrounding airports.
The most recent Department of Transportation statistics released late last week said Cincinnati was the second-most-expensive airport in the country in the first quarter of 2004, well before SimpliFares was introduced last month. But company officials have said that travel from Cincinnati is up over 60 percent in the time since the fare restructuring was introduced in August.
While done by the airline's previous firm, the SimpliFares campaign "was the first manifestation of what we are trying to do," said Matsen.
On another topic, Matsen would not speculate on how the changes at United Airlines could affect Delta, but said that the main difference was that Delta was strengthening its domestic route structure while United was shifting resources to international routes while cutting domestically.
United officials said Wednesday that the company has not determined which cities will be affected; the airline serves Cincinnati with six flights daily to Chicago-O'Hare, including three on its main line and three on regional affiliates.
Filling seats
Delta Air Lines on Wednesday said its September traffic rose 8.6 percent system wide compared with the same month last year. That increase came on a 4.6 percent rise on capacity as the airline had more planes flying. Comair saw its traffic jump 13.7 percent domestically on a 9.7 percent increase in capacity. Delta's overall load factor, or how full its planes were, rose 2.7 points to 70.5 percent.
