“One of the most dramatic turnarounds in the history
of the airline business!”
Newsweek

THE SITUATION: 1982
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AirCal was a small regional airline competing with much larger regional carriers like PSA and Western as well as majors like American and United.

THE PROBLEM
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By September 1982, AirCal had recorded a loss of 52 million dollars for the first 8 months of the year and was in a difficult financial condition. Adding to their woes, PSA announced a fare war that threatened AirCal with extinction.

THE SOLUTION
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aircal-screenshotWhile AirCal normally would have simply matched PSA’s lowered fares, Admarketing suggested a very different strategy: lower fares sharply where you have lots of empty seats and raise fares where load factors are very high. So, while PSA was advertising all seats at $45 to the Bay Area, AirCal was able to advertise seats as low as $29 to the same market. It was no contest! AirCal not only dramatically increased their revenue during the fare war but had more than doubled their market share on a number of routes after the fare war ended.

Once the fare war ended, Admarketing introduced a new campaign for AirCal with the theme: “We make flying easy.” The cornerstone of the campaign was the introduction of “single call service.” Again, this idea was suggested by Admarketing. It promised the consumer that if they called AirCal, “AirCal would book them on the most convenient flight, even if it was on another airline.”Overnight, phone calls doubled. Ninety-five percent of the bookings were on AirCal as people went out of their way to fly AirCal even when offered more convenient flights on other airlines!

The next unique service offered by AirCal was “almost first-class service at coach prices.” It offered increased leg room, a superior snack and a free glass of wine or soft drink – all for the price others charged for bare-bones coach service. The response, once again, was overwhelming.

THE RESULTS
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aircal-graph In 1982, AirCal lost almost 60 million dollars. In 1983, AirCal showed a profit of more than $35 million dollars. Both the LA Times and Newsweek hailed the turnaround as “one of the most dramatic in the history of the airline business!”

Admarketing succeeded in establishing AirCal as a superior product in a marketplace where airlines are normally regarded as commodities. AirCal’s market share continued to increase and more than doubled by 1991 when the airline was sold to American Airlines at an enormous profit.