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 Business News | November 2005 
Combined US Air, America West Must Decide: Coke, or Pepsi?
 USA Today
| | A jet from U.S. Airways takes off while others sit at Ronald Reagan National Airport outside Washington. (Larry Downing/Reuters) |
It's not the biggest hurdle to the combination of US Airways and America West Airlines, but it's one of the most visible: Do you serve Coke, or Pespi?
US Air served Coke. America West, Pepsi.
US Air sold Miller beer. America West, Budweiser.
The companies, which officially combined in late September under the US Airways name, will be making those and other choices as they merge the two company's operations, reservations systems, and yes, their beverage services.
"Were not going to have the Pepsi Challenge on board the aircraft," said Phil Gee, US Airways spokesman. "It might be behind closed doors."
The upcoming choice sets up a battle among beverage companies hoping to land the plum deals.
The choice could be worth millions to the carrier, and it gives the drink companies big, visible contracts. In 2002, United Airlines dumped Coke for Pepsi in a deal that was estimated to be worth $25 million over five years.
Gee says the drink decisions could be the most visible among hundreds the company will make and will help define the customers' in-flight experience. The company is expected to announce which way it will go in early 2006.
"People definitely have certain preferences to what beverage they like," Gee said. The airlines beverage contracts are periodically up for review, typically annually or biannually, he said.
A catering logistics team being assembled will decide. None of the beverage companies chose to comment on the debate.
Being the beverage of choice for an airline can mean great product exposure, especially for underdog niche or local companies looking to place their products. When PanAm started its shuttle service, it negotiated a deal with the Boston Beer Co., brewers of Sam Adams.
"I dont want to say we put Sam Adams on the map, but on the other hand, since 1986 when the PanAm shuttle started it had a lot of exposure, and, in fact, Delta maintains it on board right now," said Robert Mann a New York airline consultant who worked for PanAm.
Typically, airlines will pay for beverages but at less than retail prices, Mann said. They usually extract other considerations such as a fee for using the product in exchange for advertising on in-flight entertainment and in magazines.
"It depends on how hungry the brand is and how creative the airline wants to get," Mann said. "America West has some pretty creative marketers there, so my guess is theres some competition going on."
Gee said price will play a big part in determining the winners, especially at a time when the industry is under financial pressure because of soaring fuel costs. Other considerations will include how easily the products can be distributed and put on the planes, he said. |
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