The pandemic has hit the global airline industry like a two-ton hammer. With revenues plummeting by hundreds of billions of dollars and airlines retiring planes to “boneyards” as global air travel has dropped by 60% or more, companies are seeking unique ways to bolster their flagging businesses and maintain the attention of customers that they need to return to the friendly skies when the COVID-19 threat has dissipated. American Airlines has done just that by launching its own wine label and delivery service, Flagship Cellars.
For many frequent fliers, the feeling of reclining at 35,000 feet is often paired with wine – especially for those in business or first class. American wants to bring its best wine, and a reminder of its brand/service, to its patrons for a $99 monthly subscription, which offers customers access to discounted prices, a monthly shipment of three bottles of wine, and up to two AAdvantage Miles for every dollar spent. The wines in the subscription service are the same that are provided for “Flagship” ticket holders, a luxury seating option on international and transcontinental flights.
American recently posted a $3.6 billion loss in its latest earnings report, and while premium wine sales are not expected to yield any significant impact on the company’s bottom line, the marketing and customer engagement tactic is a unique move that also enables the airline to distribute a huge surplus of wine that had been sitting in warehouses. American has been primarily marketing the wine label to its AAdvantage loyalty base, but it also serves to remind other customers of the airline’s premium offerings.
Premium passengers represented only 5% of pre-pandemic airline travel in 2020, but they accounted for about 31% of global airline revenues, according to the International Air Transportation Association. To use a mobile gaming analogy, premium passengers are the “whales” of the sky.
While most experts don’t believe air travel will return to normal levels until 2022, the good news for American is that wine connoisseurs have displayed a clear preference for the airline, according to Interpret’s New Media Measure®, which shows American tied with Delta as the most frequented airline among wine drinkers during pre-pandemic months. When more customers begin to return, American is hoping that its wine program will attract at least a few more premium customers.