IEG SPONSORSHIP REPORT...Delta leverages Seattle’s Showbox Market and Showbox SODO by giving SkyMiles members the opportunity to skip the line by showing their membership card or

© 2016 IEG, LLC. ALL RIGHTS RESERVED. 1

IEG SPONSORSHIP REPORT

IN DEPTH

INSIDE THE EVOLVING AIRLINE CATEGORY Airlines increase sponsorship activity amid growing competition. What a difference a few years can make. In the not too distant past, airlines around the world were struggling to fill seats and generate profits as corporate travel budgets dried up. Five of the nine largest U.S. carriers posted losses totaling nearly $4 billion in 2009. Fast forward to the present, and airlines are reaping record profits amid low oil prices, industry consolidation and economic stability. The four biggest U.S. airlines recorded roughly $22 billion in profit in 2015. Reflecting that health, domestic passenger load factor among all U.S. carriers rose from 78.5 percent in 2005 to 85.8 percent in 2015, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. In addition to posting record profits, airlines have made at least two groundbreaking deals in 2016. Allegiant Air (“How Allegiant Air Is Using NASCAR To Support Vacation Business” 03/21/16) this year became the official passenger airline of NASCAR—the sanctioning body’s first partner in the airline category—while Emirates partnered with the Los Angeles Dodgers in a deal that some say represents the category’s largest sponsorship of a North American-based property. Further reflecting the category’s health, some airlines are moving away from in-kind deals in favor of cash partnerships. Southwest Airlines Co., (“Checking In On Southwest’s Sponsorship Strategy” 07.18.16) for example, now signs cash deals exclusively.

THE MOST ACTIVE SPONSORS IN THE AIRLINE CATEGORY (NUMBER OF DEALS)

Twenty-one percent of properties with a sponsor in the airline category report a partnership with United Airlines.

WWW.IEGSR.COM

IEG SPONSORSHIP REPORTTHE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING

JULY 25, 2016



WHERE AIRLINES SPEND MONEY



SIDEBAR

SPONSORSHIP DRIVER: FREQUENT FLIER PROGRAMS Similar to hotel and credit card companies, airlines are increasingly using sponsorship to access unique, one-of-a-kind experiences for customer loyalty programs. Below, three examples of how airlines are leveraging sponsorship to promote and access perks for the programs. United Airlines/PGA Tour United uses the PGA Tour to reward business travelers with access to special viewing sections at golf tournaments, discounts within the TPC Network and other inside-the-ropes experiences. Members can use MileagePlus points to purchase the experiences. “We provide unique experiences, which is something our customers can’t get from other airlines,” said Mark Krolick, United Airlines managing director of marketing and product development. United in February extended the four-year-old partnership with a new six-year contract. Delta Air Lines/Chelsea Football Club Delta activates Chelsea FC by offering SkyMiles members early access to home matches and VIP packages, discounts on food, drink and merchandise and access to the Delta 360° Lounge at Stamford Bridge.

Delta Air Lines/AEG Delta leverages Seattle’s Showbox Market and Showbox SODO by giving SkyMiles members the opportunity to skip the line by showing their membership card or account number on the Delta app at the Sky Priority Take Off Lane. SkyMiles members also receive exclusive presale opportunities for select AEG shows in the Pacific Northwest.

WWW.IEGSR.COM


JULY 25, 2016



SIDEBAR

SPONSORSHIP HOT BUTTONS IN THE AIRLINE CATEGORY In addition to accessing experiences for frequent fliers, airlines frequently use sponsorship to accomplish the following objectives: Promote positioning as hometown carrier Airlines often sponsor sports teams, festivals and other beloved properties to tap into the passion of the local community. “We try to tap into the local passion of a community. We want to be the hometown carrier in local markets, so we want to align with consumer passion points,” said Melissa Millice, Southwest manager of customer engagement. Promote new routes Airlines frequently use sponsorship to promote new gates, destinations and international business routes. Emirates, for example, is using its new partnership with the Los Angeles Dodgers to promote its second daily flight from Los Angeles to Dubai, American this year partnered with the Hollywood Bowl to promote two new gates at LAX, while Southwest leverages the Texas Rangers to promote destinations out of Dallas Love Field following the 2014 repeal of the Wright Amendment, a federal law that restricted flights out of the airport. Reach business travelers United, American and other carriers are increasingly using sponsorship to reach one particularly profitable customer segment: business travelers. United, for example, sponsors three property segments of interest to business travelers: golf (PGA Tour); football (eight NFL teams) and personal fitness (United Airlines NYC Half, etc.). “We serve many customer groups, and it takes a lot of customer segments to make United successful. But our target customer for sponsorship, and specifically the PGA Tour, is high-frequency business travelers,” said Mark Krolick, United Airlines managing director of marketing and product development. Promote the travel experience Airlines are increasingly leveraging sponsorship with branded lounges that give consumers a taste of the travel experience.

Delta, for example, sponsors Delta Sky360° clubs in Madison Square Garden, Target Field and other sports and entertainment venues, while American sponsors branded lounges in Chase Field and other venues.

WWW.IEGSR.COM


JULY 25, 2016



“We created the American Airlines Lounge as an extension of the Admirals Club,” said Cullen Maxey, Arizona Diamondbacks executive vice president of business operations. Delta in 2015 rolled out the Delta Sky360° Club in Atlanta’s Woodruff Arts Center, the airline’s first branded lounge at a performing arts venue.

The airline uses the lounge to engage donors and encourage giving, said Alvin Townley, director of corporate philanthropy and veterans programs with The Woodruff Arts Center. Ed Bastian, Delta CEO, serves on the organization’s board. Engage millennialsLike other categories, airlines are increasingly using sponsorship to build preference among millennials, with a focus on current and future business travelers.

Delta over the past year has placed more focus on leveraging its partnership with Madison Square Garden with social and digital promotions that dangle one-of-a-kind experiences.

“Millennials are more experienced-based (than older travelers), and Delta is using its hospitality assets to gain new customers and retain existing customers,” said Ron Skotarczak, Madison Square Garden Co. executive vice president, marketing partnerships.

Enhance the flight experience Airlines frequently use sponsorship to enhance the flight experience. Southwest leverages the Texas Rangers and other pro sports teams with “employee for a day” experiences in which athletes take tickets, make announcements, handle baggage and take on other tasks at local airports.

The athletes also discuss the importance of teamwork with Southwest employees

Sources Southwest Airlines Co., Tel: 214/792-4000 United Airlines, Inc., Tel: 872/825-4000 Arizona Diamondbacks, Tel: 602/462-3430 Madison Square Garden Co., Tel: 212/465-6000 Woodruff Arts Center, Tel: 404/733-4200



WHO DOES WHAT

SPONSOR PROFILES: THE FIVE BIGGEST SPENDERS IN THE AIRLINE CATEGORY American has the most diverse portfolio among the five biggest spenders. United Airlines is the biggest spender in the airline category, according to IEG research. The United Continental Holdings subsidiary spent between $35 million and $40 million on sponsorship in 2015, the same as 2014, according to the research. Delta comes in second with a $25 million to $30 million spend followed by American Airlines ($20 million to $25 million), Southwest ($10 million to $15 million) and JetBlue ($5 million to $10 million). While United is the biggest spender, American has the most diverse portfolio. While sports represent at least 45 percent of deals at four of the five companies, sports represent just 26 percent of American’s portfolio. The rest of the airline’s portfolio is split between the arts (30 percent), causes (26 percent), festivals (12 percent) and entertainment (4 percent).

WWW.IEGSR.COM


JULY 25, 2016







PRO SPORTS

SPONSORSHIP TREND: MAJOR CARRIERS MOVE AWAY FROM CHARTER SERVICE Majors move away from charter business, but smaller carriers fill the void. While many companies use sponsorship to gain business from properties, some airlines are taking a different path. With the exception of American, Delta and United, most major carriers do not offer charter service and do not look for business from sponsored teams. “It used to be that every deal with a major airline came with a desire for charter business. There’s no longer that desire with many of the major carriers,” said Michael Young, senior vice president of corporate partnerships with the Los Angeles Dodgers, which this year secured a new partnership with Emirates. Teams typically have two contracts with airlines: one for sponsorship, the other for charter service. The two deals are typically negotiated separately. “I don’t know what our director of travel needs, which is why that is negotiated separately,” said Cullen Maxey, Arizona Diamondbacks executive vice president of business operations. While each contract is negotiated separately, teams typically try to go with one company, assuming its charter business meets its travel needs. That’s the case with the Diamondbacks, which works with American Airlines as both a sponsor and a travel partner. The team has worked with American and US Airways (which merged with American in 2013) for the past six or seven years. “If all things are close to equal, we’re going with our long-term partner.” To be sure, charter service can be lucrative. Delta, for example, transports the New York Knicks and New York Rangers as part of its multifaceted partnership with The Madison Square Garden Co. MSG awarded the business to Delta in 2015 after spinning off its aircraft leasing business. While some major airlines have moved away from charter service, some smaller carriers are filling the void and are using sponsorship to drive their business. Eastern Air Lines is sponsoring professional and collegiate sports teams to promote its charter business, build awareness for its relaunched brand and support its reported goal of becoming more than a charter carrier.

WWW.IEGSR.COM


JULY 25, 2016



The Miami-based company this month signed a new partnership with Florida International University athletics, around which it will transport the FIU football team for all five away games. The partnership will help the athletic department save $1 million in transportation expenses over the course of the three-year sponsorship, according to an FIU release.

“This partnership, under which Eastern will fly FIU’s football team, helps further our corporate strategy of working closely with world class institutions such as Florida International University, one of the largest universities in the United States,” said Edward Wegel, Eastern president and CEO, in a statement.

Eastern is also the official airline of University of Miami athletics, Georgia State University, Georgia Southern University and the NHL Florida Panthers, the latter of which is owned by Vincent Viola, Eastern Air Lines’ majority owner.

Eastern this year also signed a marketing partnership with Paramount Pictures, around which it is promoting the summer release of Star Trek Beyond on a special livery.

The airline last week flew the cast, filmmakers and guests from Los Angeles to San Diego for the movie’s world premiere.

Sources Eastern Air Lines Group, Inc., Tel: 305/869-4248 Arizona Diamondbacks, Tel: 602/462-3430 Los Angeles Dodgers, Tel: 323/224-1500



SPONSOR PROFILE

MOVING AIRLINES FROM IN-KIND TO CASH PARTNERS One-of-a-kind experiences are key to converting airlines into cash sponsors. While Southwest Airlines (“Checking In On Southwest’s Sponsorship Strategy” 07.18.16) has moved away from in-kind deals, most airlines continue to pay for local sponsorships with tickets. Airlines are the third most active category behind media and hotels that pay for sponsorship with barter, according to IEG research. So how can properties upsell airlines from in-kind to cash sponsors? Below, sponsorship buyers and sellers weigh in on the topic. Melissa Millice, manager of customer engagement, Southwest Airlines

All too often, properties try to sell you what they have available instead of listening to your needs. Partners that ask questions and listen are few and far between. It’s more about ‘here is what’s available, and this is what it costs.’ Smart properties ask questions, listen and build partnerships around a sponsor’s specific needs. Jason Pearl, senior vice president of business development, San Francisco Giants

In-kind trade that offsets expenses is good. If you do barter, you need to eliminate all barriers for using the inventory. You need to make sure they are as flexible as possible with no blackout dates and incremental fees. If an airline tells you they’ll only do an in-kind deal, you have to create leverage. If an airline wants to give you $100,000 worth of in-kind, talk to one or two other companies and see if you can get a $50,000 cash sponsorship. That gives you leverage. Howard Freeman, executive producer, Quick Chek New Jersey Festival of Ballooning

Airlines are like hotels: they want to provide experiences to surprise and delight. Let people buy one-of-a-kind experiences with frequent flier points. That’s where airlines are finding the most value with sponsorship. If you come up with the right assets, they’re willing to pay cash.

WWW.IEGSR.COM


JULY 25, 2016





ABOUT IEG AND ESP PROPERTIES

IEG has shaped and defined sponsorship over three decades. It is the globally recognized source for industry insights, trends, training and events via sponsorship.com, its annual conference, online publications, trend reports, surveys and webinars.

IEG is part of ESP Properties, a WPP company. As a commercial and creative advisor for rightsholders, ESP Properties helps organizations unlock greater value from their audiences and brand partnerships.

Our consulting team assesses and advises how to grow the value of rightsholders’ commercial programs. We do this through a full range of services across data, digital and content development to better understand audiences and create more relevant ways to engage with them. This provides brand partners with new ways to connect with communities of fans and followers, growing the potential value of commercial partnerships.

Our sales team provides partnership strategy and sales representation to the world’s most active sponsors, within and beyond the WPP network of brand clients. Through WPP we have extensive contacts and deep insights into what it takes to create successful partnerships.

For more information about IEG and the sponsorship industry, please visit www.sponsorship.com, www.espglobal.com, or call +1 312 944 1727.

WWW. SPONSORSHIP.COM

INSIGHTSEVALUATION GUIDANCEIEG LEADS THE WAY IN SPONSORSHIP ANALYSIS, INSIGHT, VALUATION & MEASUREMENT

Documents

IEG SPONSORSHIP REPORT...Delta leverages Seattle’s Showbox Market and Showbox SODO by giving SkyMiles members the opportunity to skip the line by showing their membership card or